1. Emerging Markets: Economic and Geopolitical Fragmentation 2. LatAm in Focus: How Latin America Is Fighting Inflation 3. Sustainability (Soaring Fertilizer Prices; Brazil's Commitment to Sustainability; UN sustainability goals and developing countries) 4. Slowbalization, Reshoring, Nearshoring, & Friendshoring
Even knowing that there is a time lag between interest rate decisions and their effects, the Fed will not be able to ignore what happens to monthly inflation rates during the crossing until next year. Even if that poses a risk to a soft landing of the economy. What seems more likely, however, appears to be the combination of a global economic slowdown and continued tightening of global financial conditions. With equity markets in advanced economies still exhibiting downward slides until the monetary-financial grip stops.
Percepção de riscos de recessão nos EUA e na Europa tem sido um fator de peso na evasão de investidores, escreve Otaviano Canuto. Mesmo se sabendo que há uma defasagem temporal entre decisões de juros e seus efeitos, o Fed não poderá ignorar o que for ocorrendo com índices inflacionários mensais durante a travessia até o próximo ano, diz o articulista.
In addition to hikes in basic interest rates, liquidity conditions in the US economy will also be affected by the shrinking of the Fed's balance sheet starting this month. The "quantitative easing" (QE) that resumed strongly in March 2020, in response to the financial shock at the beginning of the pandemic, will now give way to a "quantitative tightening". How complementary - or substitute - will be those movements in interest rates and balance sheet downsizing? What are their likely consequences on capital flows to emerging markets?
Além de elevações recentes e futuras nas taxas básicas de juros, as condições de liquidez na economia dos Estados Unidos serão também afetadas pelo encolhimento do balanço do Federal Reserve (Fed) iniciado esse mês. O “afrouxamento quantitativo” (“QE” em inglês) retomado com força em março de 2020, como resposta ao choque financeiro no início da pandemia, dará lugar agora a um “aperto quantitativo” (“QT” em inglês). Ascensão de juros, QT e quedas nas bolsas estão apontando consistentemente numa direção de desaquecimento econômico e, tentativamente, declínio na inflação. E o fim está ainda longe.
(A) OECD Economics Department Webinar: Policy Challenges for Emerging Market Economies (B) A Perfect Storm for the Global Economy? (C) Otaviano Canuto discusses the May Day marches in Latin America
One can expect slower globalization (“slowbalization”) and a greater degree of regionalization. The term “slowbalization”—slowing growth in cross-border flows—can indeed be applied to the trends for goods, capital, and people after the global financial crisis rather than deglobalization—or outright declines in cross-border flows and stocks. The increases in digital cross-border activity also strengthen the concept of "newbalization": the nature and scope of globalization is evolving in the coming years as flows may continue to slow in tangible areas, like the trade of goods, while speeding up in intangible areas, including trade in services and cross-border data flows. On the other hand, “the death of globalization was an exaggerated announcement”.
Pode-se esperar uma globalização mais lenta (“slowbalization”) e com maior grau de regionalização. Até porque haverá um ônus para aqueles que buscarem uma demarcação exagerada do que é “estratégico"
The world food price index collected for the last 60 years by the United Nations Food and Agriculture Organization (FAO) hit its highest record in March, declining gently in April. Pandemic, war and death in Ukraine, and droughts in the last 2 years… Such a combination looks apocalyptical. Now it is adding global hunger risks, because of the food price crisis. The fiscal fragility inherited from the pandemic limits public programs to deal with issues in many developing countries.
A combinação de praga da pandemia, guerra na Ucrânia e secas nos últimos dois anos parece ter saído da Bíblia. Agora, essa combinação está possivelmente incorporando a fome, com a crise de preços de alimentos, em parte do mundo. O índice de preços mundiais de alimentos, coletado há 60 anos pela Organização das Nações Unidas para a Alimentação e a Agricultura (FAO, em inglês), atingiu seu recorde em março, declinando suavemente em abril. Ninguém pode afirmar estar ileso em relação ao choque de preços de alimentos. Particularmente no caso das economias mais pobres, para as quais a parcela dos alimentos na cesta de consumo é significativa.
1. Podcast O Assunto: Associada ao aumento de preços com a recuperação da atividade pós-pandemia, a inflação se consolidou como fenômeno global. E leva bancos centrais a decidir por apertos monetários, colocando recessão no horizonte. Dados divulgados nesta quarta-feira nos EUA mostram que a taxa acumulada em 12 meses chegou a 8,3% em abril, perto do maior patamar desde 1981. 2, Canal MyNews: No Cruzando Fronteiras desta sexta (13), Jamil Chade recebe o economista Otaviano Canuto, pesquisador do Policy Center for the New South. Na pauta, o impacto da guerra da Ucrânia nos preços dos alimentos.
Commodity prices stabilized in April. However, the previous commodity price shock, intensifying trends that have been present since mid-2020, have already led to significantly higher price levels in 2022. The new jumps made the increase in energy prices in the last two years the biggest in the last fifty years, since the oil shock in 1973. The war in Ukraine and the shock of energy commodity prices have not been favorable to the energy transition, as seen in the race for coal.
O choque de preços de commodities, intensificando tendências presentes desde meados de 2020, já as levaram a patamares de preços significativamente mais altos em 2022, devendo permanecer por lá no médio prazo. As perspectivas para os mercados de commodities dependerão, claro, da duração da guerra na Ucrânia, das sanções sobre a Rússia e da gravidade das interrupções nos fluxos de commodities. Para que a combinação de praga pandêmica, guerra e mortes não assuma proporções bíblicas, devemos evitar que a elas se junte uma mudança climática suscitada por mais atraso na transição energética.
Last March, a proposal of dollarizing Argentina’s economy arrived at its Congress. We summarize here the potential consequences of such a route in case the bill succeeds in getting approval. First, we point out the broad implications of dollarizing an economy. Then, we set out some cases of Latin American experiences with dollarization. Finally, we address the case of Argentina. The main potential benefit of dollarization would be elimination of domestic inflation, but at a very high cost. Argentina’s fiscal imbalances will not be eliminated by dollarization. Even though dollarization would prevent the printing of money, it imposes no constraints on government spending and borrowing. The only result is that monetary policy ceases to be available as an option, leaving almost no response capacity in case of external shocks. Moreover, dollarization creates the possibility of being exposed to pro-cyclical monetary policies unrelated to domestic necessities. It also eliminates seigniorage benefits. On top of more general features of dollarization and case studies, implementing dollarization now in Argentina would have to face hard-to-overcome challenges. Proposing dollarization under current conditions would require a selective default of domestic currency liabilities, a brutal devaluation, and/or a unilateral conversion of public deposits.
The "World Economic Outlook" report released by the International Monetary Fund (IMF) on April 19 depicted a worsening in the global economic scenario for 2022: lower economic growth and higher inflation than the January projections. As the Director-General Kristalina Georgieva said in the previous week, the war in Ukraine represented a "substantial setback" for the global economic recovery. Emerging market and developing economies (EMDE) face a common set of external shocks: rising energy and food prices; tightening in global financial conditions caused by the prospect of sharper interest rate hikes and anticipation of "quantitative tightening"; and return of restrictions on mobility in China, on account of the Covid zero policy, leading to slumping in growth and weakening one of the primary growth drivers for the other EMDE. However, the impacts of those common shocks on EMDE have been heterogeneous.