(Bloomberg) — Central bankers in Mexico and Iceland stepped up their effort this week to quash inflation, boosting interest rates further into restrictive territory.
Mexico stunned markets by increasing rates by half a percentage point to a record 11%, in a move by the central bank to outpace the Federal Reserve that no top economist projected. Officials in Iceland accelerated monetary tightening, adding a half-point hike to what is already western Europe’s highest interest rate.
Policymakers in Australia were also quite hawkish, with the central bank boosting its forecast for core inflation this year as it tries to ensure the economy avoids a wage-price spiral.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
India’s central bank slowed the pace of its repurchase-rate hike to 25 basis points, but hopes of a pause dashed after Governor Shaktikanta Das said a change in the current stance would need a decisive moderation in prices. Officials in Sweden and Serbia hiked rates, while those in Poland, Uganda, Romania, Russia and Peru stood pat.
Europe
The UK avoided a recession last year by the narrowest of margins. Gross domestic product was unchanged in the fourth quarter following a revised 0.2% decline in the previous three months. The economy was still 0.8% smaller than it was at the end of 2019, making the UK the only Group of Seven country that has yet to fully recover output lost during the pandemic.
German factory orders grew more than anticipated in December in the latest sign that Europe’s largest economy will get through the winter without seeing a slump.
Asia
Japanese workers’ nominal wages in December rose at the fastest pace since 1997, an acceleration in gains that may fuel speculation the central bank will consider shifting policy after Governor Haruhiko Kuroda steps down in April.
China’s consumer inflation accelerated last month as the country reopened and the Lunar New Year holiday spurred demand, although gains remain muted enough for the central bank to keep easing monetary policy to support the economy’s recovery.
US
The US trade deficit widened to a record last year on a surge in imports as American companies scrambled early on to ensure they had enough merchandise on hand to meet demand. This year, however, global trade is expected to decelerate after central banks aggressively raised interest rates to combat an inflation surge owed in part to strong demand.
Don’t count the US consumer out just yet. Two sets of data out Friday raised hopes that the pullback in household spending at the end of last year was just a blip. In the first month of 2023, Americans ramped up purchases of services — everything from restaurant meals to health care — while businesses went on a surprise hiring spree.
Talks for a new labor pact between West Coast dockworkers and their employers are stretching into a 10th month, but with no agreement in sight and volumes dropping, patience is wearing thin. A volume slowdown is lowering urgency on the new deal for 22,000 dockworkers, according to people working in the logistics industry. Shipping costs have also plunged.
Emerging Markets
A daunting economic landscape will exacerbate the humanitarian catastrophe wrought by a pair of earthquakes on Turkey, as early estimates of the damage point to mounting inflation and budget risks on the nation’s $819 billion economy. Public spending may be equivalent to 5.5% of GDP, according to an initial estimate from Bloomberg Economics.
Chile’s consumer prices rose well above forecast in January, just as the central bank was turning more hawkish, conditioning eventual interest-rate cuts on stronger evidence that inflation is easing toward target.
–With assistance from Philip Aldrick, Andrew Atkinson, Laura Curtis, Toru Fujioka, Colleen Goko, Netty Ismail, John Liu, Matthew Malinowski, Reade Pickert, Olivia Rockeman, Anup Roy, Augusta Saraiva, Srinivasan Sivabalan, Alexander Weber, Erica Yokoyama and Lin Zhu.
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.
