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Price pressures are now gathering momentum across economies in Asia, bringing the continent more in line with the rest of the world in facing historic inflation that’s creating a painfully high cost of living.
Japan’s producer prices climbed in March by more than expected, consistent with other recent inflation readings from countries like India and South Korea. Similar stories continued to play out in the U.S., where consumer prices rose the most since 1981, and in the U.K., where inflation was the quickest in three decades.
As a result, an increasing number of central banks around the world are taking more aggressive monetary policy stances.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
Russia’s war with Ukraine will slow the world economy’s nascent rebound from the pandemic, reduce goods trade and potentially lead to a broader splintering of global commerce, according to the World Trade Organization. The Geneva-based trade body lowered its projection for growth in merchandise trade this year to 3%, down from a previous projection of 4.7%.
Central banks around the world this week stepped up their efforts to fight inflation. Policy makers in Israel delivered an interest-rate hike that exceeded most forecasts, while those in New Zealand and Canada each raised rates by the most in 22 years. Namibia, Argentina and South Korea also tightened policy.
Asia
The world is now facing a synchronized inflation outbreak as food and energy prices surge in Asia, a shift from just a few months ago when the region appeared to avoid the price fever gripping the U.S. and parts of Europe.
Japan’s producer prices climbed more than expected in March, hovering close to the fastest pace in more than four decades and maintaining pressure on companies trying to absorb higher costs.
U.S.
Consumer prices rose in March by the most since late 1981, underscoring the painfully high cost of living and reinforcing pressure on the Federal Reserve to raise interest rates even more aggressively. The consumer price index increased 8.5% from a year earlier, and the 1.2% monthly increase was the biggest gain since 2005.
The latest reports on retail sales and consumer sentiment offered a glimmer of hope that Americans aren’t ready to pull back on spending en masse in the face of decades-high inflation.
The latest U.S. crop conditions data highlight the toll that drought is taking on winter-wheat fields, and Ukraine’s grain harvests are expected to fall significantly amid Russia’s war. The Department of Agriculture’s Foreign Agricultural Service recently said that the U.S. remains the only “feasible supplier” to fill the gap left by Russia’s war in Ukraine.
Europe
U.K. inflation surged to a 30-year-high of 7% last month, intensifying a cost of living crisis that threatens to derail the economic recovery. It adds to pressure on the government and Bank of England to act, with prices set to surge further this month when a 54% increase in energy costs hit household bills.
The tightest U.K. labor market in living memory is failing to tempt people back into work, creating severe shortages for employers. The number of people declared inactive — neither in work nor looking for a job — rose further in the three months through February to 8.86 million, according to the Office for National Statistics. That’s the equivalent of 21.4% of the population age 16 to 64, the highest rate since 2017.
Confidence in Germany’s economic recovery slid for a second month as investors worry that price spikes driven by Russia’s war in Ukraine will dampen output. The ZEW institute’s gauge of expectations dropped to the lowest level since the Covid-19 pandemic erupted in 2020.
Emerging Markets
Sri Lanka warned of an unprecedented default and halted payments on foreign debt, an extraordinary step taken to preserve its dwindling dollar stockpile for essential food and fuel imports. All outstanding payments to bond holders, bilateral creditors and institutional lenders will be suspended until a debt restructure, the finance ministry said in a statement earlier this week.
São Bernardo, the city of under a million, has often been called Brazil’s Detroit, though the comparison is not all that flattering these days. It offers a unique view of Brazil at this moment in time, as the country wallows in a recession, battered by soaring prices and plummeting employment, with the pandemic not entirely behind it and a presidential election in October.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
