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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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
