FocusEconomics Insights - Latest Posts
May 22, 2017
Urban unemployment rose at the fastest rate in over 20 years last year
The deepening economic crisis in Latin America was evident last year, which marked the second consecutive year of contraction in the labor market with the urban unemployment rate rising from 7.3% in 2015 to 8.9%. This is the largest annual increase in more than two decades, influenced in particular by the deterioration of the Brazilian labor market, according to the report Coyuntura Laboral en América Latina y el Caribe from the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labor Organization (ILO). However, despite the poor data, levels of unemployment are still lower than in the late 1990s and early 2000s.
May 18, 2017
As reviewed by Dr. Caroline Gray, Senior Economics Editor at FocusEconomics
To ease or not to ease? When the European Central Bank took the decision to embark on a massive quantitative easing program in early 2015, it seemed to have little other option. With heavily indebted governments across Western Europe coming under fire from their citizens suffering the brutal effects of austerity measures, politicians were practically begging for some room for maneuver. And with interest rates already pretty much as low as they could go, the ECB’s only way of responding to the clamor was to start injecting liquidity into the economy, buying up government debt and thereby lowering bond yields and alleviating some of the pressure on governments.
May 16, 2017
After years of booming economic growth, it was thought by some up until recently that China was not subject to the normal rules of economic and financial gravity and that the country's growth would go on forever. However, after the financial crisis many came to realize that China's economic growth was heavily reliant on government debt-fueled investment and if that trend continued a serious 1990s Japan-esque economic collapse could be on the cards. Chinese authorities decided that growth needed to slow down and a lower "new normal" for growth has been targeted. And so it has begun in recent years. China's economic growth has steadily come back down to earth, as Chinese authorities have begun an economc rebalancing toward a more sustainable consumption-based economy.
We sat down with our Head of Economic Research and China Senior Economist Ricard Torné so he could give us an update on China's economic rebalancing and outlook for the 2017 and beyond.
May 12, 2017
Without higher productivity, Latin America’s economic vitality will be vulnerable to three potentially very disruptive threats.
Over the past 15 years, Latin American economies have grown faster than many developed regions, yet they have lagged behind other regions in the developing world. Average growth over this period in Latin America was 3%, almost 80% of this was due to population growth and not to productivity. According to the McKinsey Global Institute (MGI), between 2000 and 2015 productivity in Latin America grew by just 0.6%, one of the lowest in the world. MGI also points out that without greater productivity, there are three threats to the region’s economic momentum that combined have the potential to be very disruptive.
May 9, 2017
Assessing shifts in the giant current account surpluses of Germany, China and Japan
Decades of conflicting perspectives over the causes and effects of global trade imbalances have been thrust back into the spotlight in recent months by Donald Trump’s brazen criticism of almost every country with a significant current account surplus with the U.S. His controversial accusation that big exporter countries are deliberately weakening their currencies to gain a competitive advantage taps into an issue that has perplexed and divided economists and policymakers ever since the mid-1990s. At that time, countries such as the U.S. were starting to build up large current account deficits, while others such as China, Germany and Japan were accumulating large surpluses.
May 8, 2017
The commodity super cycle is well and truly over, as has been exemplified by the tumble in commodity prices over the last few years. Emerging market economies that depend heavily on commodities exports for economic growth have been floundering as a result. However, Commodities prices are on their way back with underlying fundamentals of the commodity markets remaining positive through Q1 and are expected to continue to support the recovery throughout this year. But will the comeback in commodities prices impact the emerging market economies' economic growth? In this post we take a look at some of the commodities that are making a comeback and the outlook their biggest exporters.
April 25, 2017
Recent changes within Mercosur and the Trump's victory in the U.S. have created a situation that would have been unimaginable just a few months ago
"Rarely in history do scenarios align as they are aligned today," Mexico's Economy Minister, Ildefonso Guajardo, said when speaking about the first meeting of Mercosur and the Pacific Alliance countries’ foreign ministers.
April 20, 2017
Productivity is considered by some to be the most important area of economics and yet one of the least understood. Its simplest definition is output per hour worked, however, productivity in the real world is not that simple. Productivity is a major factor in an economy’s ability to grow and therefore is the greatest determinant of the standard of living for a given person or group of people. It is the reason why a worker today makes much more than a century ago, because each hour of work produces more output of goods and services.
According to Ian Stewart, Deloitte’s Chief Economist, “It is hard to overstate the importance of productivity in driving improvements in living standards. Since 1850, UK GDP per head has risen 20-fold, transforming our standards of living. If productivity had remained flat over that period, GDP per head would only have doubled.”
April 18, 2017
The risk of increased tension and a deterioration in relations under the Trump government will remain high in Mexico and across Latin America. The policies pursued by the U.S. president in areas such as trade and immigration will have an important bearing, particularly in Mexico, although current developments suggest that Trump is not likely to follow through on some of his more radical campaign pledges, while the renegotiation of NAFTA that he announced after being sworn is likely to lead to adjustments to the agreement rather that its total termination.
Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
April 14, 2017
France is heading to the polls on 23 April after the most unpredictable election race in recent history. Political outsiders have made large inroads after France’s two main political parties failed to deliver on promises of unleashing faster growth. With an uneven economic recovery and years of sluggish growth, the economy has taken center stage in the election debate. Each candidate offers a different solution to jumpstart activity, but at the core of all their economic plans lies the urgent need to implement far-reaching reforms to halt the decline of France’s economic power. To gain insight into the upcoming election and its economic consequences, we spoke with one of our panel members, Marion Amiot, Senior Economist at Oxford Economics.
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