Each month, Mint's Plain Facts section publishes the latest in key global economic data, summarizing the world's biggest trends worth watching. The accompanying analysis and graphs seek to explain how each story is causing ripples on the world stage, where it will go in the coming weeks, and how it could impact India. Masu. This time, we will explain future decisions by central banks around the world and deflation in China, which casts doubt on growth prospects.
Each month, Mint's Plain Facts section publishes the latest in key global economic data, summarizing the world's biggest trends worth watching. The accompanying analysis and graphs will explain how each story is causing ripples on the world stage, where it's headed in the coming weeks, and how it could impact India. That's what I mean. This time, we will explain the future decisions of central banks around the world and the deflation in China, which is casting doubt on the growth outlook.
1. Monetary policy
Nearly four years ago, central banks around the world cut interest rates to record lows and held them there for months. It then quickly reinstated the hike to curb the resulting inflation. The debate has now shifted to maintaining the policy rate for balance. In December, the central banks of the United States, United Kingdom, European Union, India, and Japan will announce their monetary policy decisions. All of these central banks except Japan have already raised interest rates significantly from their pandemic lows, and with inflation not as strong as it was a year ago, interest rates could once again be maintained at what is said to be high. Highly sexual. Long-term interest rate system. Although inflation may be softening, it has not yet settled into the targets set by central banks. Meanwhile, Japan has so far maintained an “ultra” accommodative stance, but could take its first action early next year as inflation continues to exceed target.
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1. Monetary policy
Nearly four years ago, central banks around the world cut interest rates to record lows and held them there for months. It then quickly reinstated the hike to curb the resulting inflation. The debate has now shifted to maintaining the policy rate for balance. In December, the central banks of the United States, United Kingdom, European Union, India, and Japan will announce their monetary policy decisions. All of these central banks except Japan have already raised interest rates significantly from their pandemic lows, and with inflation not as strong as it was a year ago, they are likely to maintain what are said to be high rates again. . Long-term interest rate system. Although inflation may be softening, it has not yet settled into the targets set by central banks. Meanwhile, Japan has so far maintained an “ultra” accommodative stance, but could take its first action early next year as inflation continues to exceed target.
2. Trouble ahead?
China's slowing growth has been a cause for concern around the world, and the fact that the country is currently suffering from deflation is even more of a concern. China experienced deflation in October, the second time in four months, raising concerns that the world's second-largest economy may be experiencing something similar to what Japan faced in the 1990s. leading to concerns. Inflation is considered a signal about the performance of the economy, and the drop in prices could be a sign of weaker demand, as it was the second decline on a year-on-year basis and the sixth decline on a month-on-month basis. While many parts of the world suffer from high inflation, China's deflation bucks this trend. The country's accommodative monetary policy may also have widened the interest rate differential between China and the United States, encouraging capital outflows. In the quarter ended September, China reported negative foreign direct investment (FDI) flows for the first time in 25 years, suggesting weak investor sentiment.
3. Tackling climate change
As climate change becomes an increasingly serious global issue affecting agricultural output and food prices, the Conference of the Parties (COP), the annual international climate summit convened by the United Nations, will be held from November 30 to December. It will be held in Dubai until the 12th. Despite the far-reaching effects of climate change, the annual negotiations remain divisive, with poorer countries appearing to bear the brunt of the environmental pollution caused by the West's historic development. Additionally, the venue for this year's COP is also embroiled in controversy, as the United Arab Emirates is a major oil producing country. Countries have pledged funding to fight climate change, but many are falling short. According to the latest information from the Global Fund, as of December 2022, climate change funds deposited by developed countries have still fallen short of the promised amount by $5 billion. The US, UK and Germany are among the countries with the largest differences (in absolute terms). ) between the pledged amount and the deposited amount.
4. Argentina's predicament
High inflation is currently a global headache, but it's not as bad as the problem facing Argentina, which saw triple-digit price increases year-on-year in each month from February to October. do not have. The result was a victory for right-wing liberal Javier Millay, who last week vowed to “eradicate” inflation in the country. The president-elect has promised to replace the country's currency, the peso, with the US dollar (known as dollarization). Some Latin American countries, such as Ecuador and El Salvador, have already adopted the dollar as their currency to provide economic stability, but given Argentina's size, dollarization is likely to increase. The International Monetary Fund currently predicts Argentina's inflation rate will moderate to 32.5% by 2028.
5. Will the tide change?
Over the past two years, the global smartphone market has been under pressure due to component shortages and weak demand due to slowing economic growth. According to quarterly data released by Counterpoint Research, global smartphone shipments decreased by 0.7% year-on-year in the July-September period, by 9% in the April-June period, and by 14.2% in the January-March period. . Although shipments are well below 2021 levels, the pace of contraction is slowing each quarter. Additionally, global monthly smartphone sales actually increased by 5% year-on-year in October, marking the 27th consecutive month of decline as emerging markets recover, according to the latest provisional figures from Counterpoint Research's monthly tracker. Broke it. Indian festival-related optimism. Expansion is expected to continue in the October-December period, and the global smartphone market will enter an era of gradual recovery.
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