Daily update
Daily update
- The World Bank’s Global Economic Prospects offered gloomy forecasts for GDP growth in the coming five years. If we suspend disbelief and accept the forecasts as accurate, global living standards should do better than the World Bank forecasts imply. Swathes of the world economy have declining populations, meaning headline GDP does a poor job of reflecting living standards. Structural change increases efficiency, and those efficiency gains may go to improving impact economy standards (the environment, work-life balance, etc.) rather than the crude output metrics of GDP.
- Japan’s November wages disappointed, raising questions about whether the Bank of Japan will tighten policy soon. Weakness was due to poor seasonal bonus payments, and December data will be a more important indicator.
- Bank of England governor Bailey testifies to Parliament. This is of interest as the BoE may be the first major central bank to ease policy. The UK is a more interest rate sensitive economy than many developed markets, and the post-pandemic inflation experience has been in line with most other large economies.
- More economies have been offering weak, or weaker-than-expected consumer price inflation. The tendency for inflation to surprise to the downside is not that surprising. Mathematical models will underestimate the effects of ending a profit-led inflation episode.