central bank – Avance Economico http://avanceeconomico.com/ Sun, 13 Mar 2022 16:00:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://avanceeconomico.com/wp-content/uploads/2021/07/icon-7.png central bank – Avance Economico http://avanceeconomico.com/ 32 32 EDITORIAL: Avoiding the stagflation of the 1970s https://avanceeconomico.com/editorial-avoiding-the-stagflation-of-the-1970s/ Sun, 13 Mar 2022 16:00:00 +0000 https://avanceeconomico.com/editorial-avoiding-the-stagflation-of-the-1970s/ Rising price pressures have some people worried about inflation, while others wonder if inflation could lead to stagflation, which would hit the economy much harder. As Russia’s invasion of Ukraine intensifies, with more sanctions on Russia and more supply chain disruptions, the prices of energy products, agricultural products and raw materials have soared in boom, […]]]>

Rising price pressures have some people worried about inflation, while others wonder if inflation could lead to stagflation, which would hit the economy much harder. As Russia’s invasion of Ukraine intensifies, with more sanctions on Russia and more supply chain disruptions, the prices of energy products, agricultural products and raw materials have soared in boom, and concerns about the risk of stagflation at home and abroad are growing.

Today’s oil price volatility is reminiscent of the 1970s, when global inflation soared after Arab members of OPEC imposed an oil embargo against the United States in 1973 and the United States United imposed an oil embargo against Iran in 1979, resulting in stagflation: a situation of high inflation. , high unemployment and slow economic growth.

These major oil shocks were not the only challenges of the decade, but they were a big part of the problem. Soaring oil prices triggered inflation rates not seen since World War II in many countries as their economic growth rates fell dramatically.

Coface, an international credit insurance and management services group, said last week that Russia’s invasion of Ukraine had triggered turmoil in financial markets and significantly increased uncertainty about an economic recovery. world. The group added that rising commodity prices have intensified the threat of long-term high inflation, which would increase the risk of stagflation and social unrest. Amid this macroeconomic crisis, industries such as the automotive, transport and chemical sectors appear to be the most vulnerable, he said.

Although energy prices rose sharply last week – with Brent oil, the global benchmark, surging above US$130 a barrel to reach the highest price since 2008 – and consumer price data published by the United States and European countries indicating that inflationary pressure is building faster than expected, today’s rising inflation is different from the stagflation of the 1970s.

At that time, there was a shortage of basic necessities, as well as rising energy costs, and some governments were inexperienced and made poor policy decisions – such as price and wage controls and rationing – which which only made the problem worse once the checks were done. survey.

Today there are shortages of some goods and rising energy costs, but these are mainly the result of increased demand as economies reopen and disruptions to supply chains and logistics due to the COVID-19 pandemic, not the direct effects of embargoes or boycotts.

Since 1990, there has been no global inflation or stagflation, thanks to free trade and global production, trends that have helped stabilize global supply and limit rising prices.

So far there are no signs that stagflation is setting in. A slight increase in consumer prices is not necessarily a bad thing, as it is simply a result of current economic activity and is beneficial for economic growth.

As the state of affairs since 1990 has shown, as long as free trade continues and global production remains the model, stagflation seems an unlikely scenario, even if price swings occur due to conflict. Russian-Ukrainian.

As Taiwan’s consumer price index rose 2.36% year-on-year last month – remaining above the central bank’s 2% warning level for the seventh consecutive month – and that inflation risks are biased on the upside, as Russia’s invasion spiked prices and heightened the risk of broader supply disruptions, policymakers must carefully balance inflation control and policy measures economic growth, implement measures to care for the most vulnerable in society and closely monitor the economic climate abroad.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. The final decision will be at the discretion of The Taipei Times.

]]>
What is the “Great Reset” and how have Russia and Ukraine changed it? | Opinion https://avanceeconomico.com/what-is-the-great-reset-and-how-have-russia-and-ukraine-changed-it-opinion/ Sat, 12 Mar 2022 05:00:00 +0000 https://avanceeconomico.com/what-is-the-great-reset-and-how-have-russia-and-ukraine-changed-it-opinion/ In June 2020, three months into the pandemic, the head of the World Economic Forum said COVID-19 provided an urgent reason for the world to pursue a “great reset” of capitalism. “The world must act together and quickly to revamp all aspects of our societies and economies, from education to social contracts and working conditions,” […]]]>

In June 2020, three months into the pandemic, the head of the World Economic Forum said COVID-19 provided an urgent reason for the world to pursue a “great reset” of capitalism.

“The world must act together and quickly to revamp all aspects of our societies and economies, from education to social contracts and working conditions,” wrote Klaus Schwab. “Every country, from the United States to China, must participate, and every industry, from oil and gas to technology, must be transformed.”

That sounds more like an order than a suggestion, which helps explain why some conservatives have been outraged at the idea of ​​America taking orders from an 83-year-old German economist.

Radio personality Glenn Beck, in particular, fought against Schwab’s vision of a new kind of capitalism, which he calls “stakeholder capitalism”. And in January, Beck and his co-author Justin Haskins released a book outlining their opposition to what they call “the movement that could finally put out the flame of freedom in America.”

Then something unexpected happened: Russia invaded Ukraine and the conflict displaced COVID-19 as the world’s most pressing concern. But instead of sidelining the conversation about the Great Reset, the Ukraine crisis intensified it.

Here’s why a brutal military operation in Eastern Europe has some Americans worried about how it will affect their lives – whether or not the United States is drawn into the war.

While Beck is sometimes denounced as a conspiracy theorist who plays on people’s fear for ratings, a 2020 headline on National Review’s website read, “The Great Reset: If Only It Were That a conspiracy.

In fact, Schwab and other supporters of the Great Reset are outspoken about their goals, which include exchanging a shareholder-based economic system for one that includes disparate stakeholders, an increased emphasis on environmental efforts and social responsibility, and increased global cooperation.

While the World Economic Forum’s website nods to the late American economist Milton Friedman, some of its goals seem more in line with the politics of Bernie Sanders and Alexandria Ocasio-Cortez.

Of his vision, Schwab wrote, “Regardless of the details, the role of the state will increase and in doing so will significantly affect the way business is conducted. Taxes will also rise, he said, “especially for the more privileged.” He urges the world to work together on policies that will ensure “a fairer and greener future”.

None of this is terrifying on the scale of, say, a military force storming your borders with the declared intention of decapitating your government. In fact, writing for National Review, Andrew Stuttaford called the book “The Great Reset” written by Schwab and Thierry Malleret “dreary and horribly written”, something that seems to have “escaped from a PowerPoint presentation for a somber corporate retirement.

And Schwab has been selling his ideas for decades, Stuttaford noted.

But Schwab realized, and rightly so, that there would be no return to “normal” after the pandemic, and that in the transition there was an opportunity to intentionally reshape the new normal, a bit like the redrawing of the borders of nations at the end of the First World War.

For Schwab and other Great Reset supporters, the pandemic has presented a moment to “build back better” — a line that most Americans call Joe Biden’s failed spending bill, but which is actually a talking point of the World Economic Forum.

Ironically, part of the agenda for last year’s World Economic Forum gathering in Davos, Switzerland focused on “building trust”. Clearly, the group has work to do in this regard, since those most suspicious of the Great Reset have suggested that the pandemic was planned in order to bring about Schwab’s new world order and that COVID -19 and vaccines are a sinister form of population. control.

With the number of COVID-19 cases and deaths falling, at least in the United States, the pandemic was beginning to urgently recede when Russia invaded Ukraine in February. One would have thought that talk of the Great Reset would have ceased as well. But for many people, the invasion is another “serious crisis that cannot be wasted” on Great Reset supporters, as Beck said on his talk show this week.

“Make no mistake. You are going to see this economy crack and the dollar collapse,” he said.

Beck was talking about Biden’s executive order, signed Wednesday, that called for a federal study of cryptocurrencies — digital assets, such as Bitcoin, that aren’t managed by governments. The order authorizes the creation of a “whole-of-government strategy” to protect consumers and national security and “address climate risks”.

But for Beck, the most troubling part of the order was Biden’s directive to “urgently” explore a U.S. Central Bank digital currency, “a new digital dollar.”

The White House said it would grant “urgency to the research and development of a potential CBDC in the United States, if the show is deemed to be in the national interest.” The White House did not specify what circumstances would justify the transfer to the digital currency.

“It will mean that the destruction of the dollar is approaching. Your dollar,” Beck said, adding that gas prices, inflation and chaos in Ukraine are all creating opportunities for dramatic change.

“Everything, everything, in your life will soon be different,” Beck continued. “They will move from the US dollar to a digital currency, a currency that can be tracked, controlled, manipulated and designed for, in the words of the White House, equitable access to safe and affordable financial services. …(I)t will control you and your life and reshape all of society.

Not everyone was so alarmed. The Wall Street Journal reported that the Bitcoin price rose 9% and an industry insider said the planned regulation will help the industry grow as consumers will feel more confident. Some, however, expressed surprise at the scope of the order.

“Before this executive order, the narrative that had been circulating was that the administration was about to crack down on crypto. This executive order is a full 180 of that. This is as close to crypto adoption as you could have hoped for from this Biden administration, if you’re pro-crypto,” said Lee Reiners, executive director of the Global Financial Markets Center at Duke University School of Law, at the Wall Street Journal. .

This, of course, is in line with what the people who are warning about the Great Reset are saying: that we are headed for fascist controls that could eventually involve a global digital currency.

One of the most famous supporters of the World Economic Forum and its agenda is Prince Charles, who said, “We have a golden opportunity to get something good out of this crisis.” He went on to say that “the unprecedented shockwaves of the pandemic may well make people more receptive to grand visions of change.”

With nebulous goals that sound more like a progressive agenda than anything offered by the GOP, and an agenda that appears to be set by an unelected German economist, it’s no surprise that conservatives resist anything resembling to a great reset.

And while Beck might be seen by many as a disaster note seeker, know that he was right about that: “Rapid inflation is a very real and dangerous possibility,” he wrote in “The Great Reset”.

]]>
How Russia Sanctions Affect the Global Economy https://avanceeconomico.com/how-russia-sanctions-affect-the-global-economy/ Tue, 01 Mar 2022 08:00:11 +0000 https://avanceeconomico.com/how-russia-sanctions-affect-the-global-economy/ In just days, the global economic outlook darkened as troops fought in Ukraine and surprisingly powerful financial sanctions rattled the Russian economy and threatened to fuel further global inflation. The price of oil, natural gas and other commodities soared on Monday. At the same time, the groaning weight on supply chains, still struggling due to […]]]>

In just days, the global economic outlook darkened as troops fought in Ukraine and surprisingly powerful financial sanctions rattled the Russian economy and threatened to fuel further global inflation.

The price of oil, natural gas and other commodities soared on Monday. At the same time, the groaning weight on supply chains, still struggling due to the pandemic, increased as the United States, Europe and their allies tightened the screw on financial transactions from Russia and froze hundreds of billions of dollars of central bank assets held offshore.

Russia has long been a relatively minor player in the global economy, accounting for just 1.7% of total global output despite its huge energy exports. President Vladimir V. Putin has moved to further isolate it in recent years, building up a reservoir of foreign exchange reserves, reducing the national debt and even banning cheese and other food imports from Europe.

But while Mr Putin has ignored a list of international standards, he cannot ignore a massive, modern financial system that is largely controlled by governments and bankers outside his country. He mobilized tens of thousands of his soldiers and, in response, the Allied governments mobilized their vast financial power.

Now, “it’s a bet between a financial clock and a military clock, to vaporize resources to fight a war,” said Julia Friedlander, director of the Economic Statecraft Initiative at the Atlantic Council.

Together, the invasion and the sanctions inject a huge dose of uncertainty and volatility into economic decision-making, increasing risk to the global outlook.

The sanctions were designed to avoid disrupting essential energy exports, which Europe, in particular, depends on to heat homes, power factories and fill gas tanks. This helped to mitigate, but did not erase, a spike in energy prices caused by war and concerns over disruptions in oil and gas flows.

Concerns about shortages have also pushed up the price of some grains and metals, which would inflict higher costs on consumers and businesses. Russia and Ukraine are also major exporters of wheat and corn, as well as essential metals, such as palladium, aluminum and nickel, which are used in everything from cellphones to automobiles.

Transportation costs, already staggering, are also expected to skyrocket.

“We’re going to see skyrocketing rates for ocean and air,” said Glenn Koepke, general manager of network collaboration at FourKites, a supply chain consultancy in Chicago. He warned that sea rates could double or triple from $10,000 per container to $30,000 per container, and air freight costs are expected to rise further.

Russia has closed its airspace to 36 countries, meaning seaplanes will have to divert to circuitous routes, causing them to spend more on fuel and perhaps encouraging them to downsize their loads.

“We’re also going to see more product shortages,” Koepke said. Although the season is slower now, he said, “companies are ramping up summer volume, and that’s going to have a major impact on our supply chain.”

In a flurry of updates on Monday, several Wall Street analysts and economists admitted they had underestimated the extent of Russia’s invasion of Ukraine and the international response. With events accumulating rapidly, assessments of the potential economic fallout ranged from mild to severe.

Inflation was already a concern, reaching its highest level in the United States since the 1980s. Now questions about how much inflation has risen – and how the Federal Reserve and others will react central banks – hovered over each scenario.

“The Fed is in a box, inflation is running at 7.5%, but they know if they raise interest rates it will drive markets down,” said Desmond Lachman, senior researcher at the American Enterprise Institute. “Political choices are not good, so I don’t see how this has a happy outcome.”

Others were more cautious about the ripple effects given the isolation of the Russian economy.

Adam Posen, president of the Peterson Institute for International Economics, said there were thorny questions, particularly in Europe, about what the conflict would mean for inflation – and if he posed the prospect of stagflation, in which economic growth slows and prices rise rapidly.

But overall, he said, “damage will likely be minimal.”

This does not mean that there will not be severe pain in places. Mr. Posen noted that a handful of banks in Europe could suffer from their exposures to the Russian financial system and businesses in Eastern Europe could lose access to money in the country.

Thousands of people fleeing Ukraine are also flocking to neighboring countries such as Poland, Moldova and Romania, which could increase their costs.

The Turkish economy, already in difficulty, is likely to suffer. Oxford Economics lowered its annual growth forecast for Turkey by 0.4 percentage point to 2.1% due to rising energy prices, financial market turmoil and a decline in tourism.

In 2021, 19% of its visitors came from Russia and 8.3% from Ukraine. Inflation, already at a two-decade high of nearly 50%, is now expected to hit 60%, Oxford said.

In the United States, the president of the Council of Economic Advisers of the Biden administration, Cecilia Rouse, said the greatest impact on the American economy of the war was the rise in gasoline prices. “It definitely clouded the outlook,” she told a forum in Washington.

Gasoline prices are about a dollar higher than a year ago, with a national average of $3.61 per gallon, according to AAA.

Rising energy prices are hard on consumers, yet good for producers – and the US economy has both.

Other oil-producing countries will also see an increase in their income. And for Iran, which has been shut out of the global economy for years, demand for oil from other sources could help ease negotiations to lift sanctions.

In the longer term, the current conflict is likely to have effects on the future budgetary decisions of several countries. German Chancellor Olaf Scholz has announced that he will increase military spending to 2% of its economic output.

“Defense spending has fallen steadily in the post-war world,” Deutsche Bank chief executive Jim Reid wrote in a note on Monday. Now, with this shift in “the geopolitical tectonic plates,” he said, the priorities are shifting and “those levels are likely to rise.”

In Russia, the central bank and the government have taken a series of measures, including doubling key interest rates to 20% to increase the attractiveness of the rouble, prohibiting people from transferring money to accounts with abroad and by closing the stock exchange to contain the damage and reduce the risks. panic.

“What’s happening right now is we’re seeing the dismemberment of one of the largest economies on the planet,” said Carl Weinberg, chief economist at High Frequency Economics. “And from what I know of the tactics, that’s a dangerous tactic.”

Peter S. Goodman and Jeanna Smialek contributed report.

]]>
“Vedomosti”: The Ministry of Economic Development of the Russian Federation has proposed to lower the forecast for the GDP growth rate to 2.8% in 2022 https://avanceeconomico.com/vedomosti-the-ministry-of-economic-development-of-the-russian-federation-has-proposed-to-lower-the-forecast-for-the-gdp-growth-rate-to-2-8-in-2022/ Mon, 21 Feb 2022 00:33:24 +0000 https://avanceeconomico.com/vedomosti-the-ministry-of-economic-development-of-the-russian-federation-has-proposed-to-lower-the-forecast-for-the-gdp-growth-rate-to-2-8-in-2022/ MOSCOW, February 21. /Then 24/. The Ministry of Economic Development of the Russian Federation estimates Russia’s GDP growth in 2022 at 2.8% instead of 3%. The department has submitted proposals to revise socio-economic development forecasts for 2022-2024 to the government and the presidential administration, the newspaper wrote on Monday.Vedomosticiting a federal official and two government […]]]>

MOSCOW, February 21. /Then 24/. The Ministry of Economic Development of the Russian Federation estimates Russia’s GDP growth in 2022 at 2.8% instead of 3%. The department has submitted proposals to revise socio-economic development forecasts for 2022-2024 to the government and the presidential administration, the newspaper wrote on Monday.Vedomosticiting a federal official and two government sources familiar with the updated interim forecast.

In September, according to the official forecast for 2022-2024, the ministry expected GDP growth of 3% this year. The revised estimate is due to higher-than-expected GDP growth in 2021, not a deterioration in growth forecasts for the Russian economy, a federal official told the newspaper. He added that the updated indicators were discussed on February 17 during a meeting on economic issues with Russian President Vladimir Putin.

The new parameters of the forecast will be presented in March as planned, consultations are underway with interested departments and the Central Bank, a representative of the Ministry of Economic Development told the publication.

According to Rosstat’s first estimate, Russia’s GDP growth in 2021 reached 4.7%, exceeding the Ministry of Economic Development’s forecast of 4.4-4.5%. Thus, the Russian economy posted the strongest growth since 2008, when GDP grew by 5.2%. Compared to 2019, the GDP of the Russian Federation increased by 1.9%. GDP growth in 2021 in Rosstat is associated with the recovery of economic activity after the coronavirus pandemic.

Source

Disclaimer: If you need to update/edit/delete this news or article, please contact our support team. Learn more
]]>
US Sanctions Against Russian Banks Are The West’s Most Powerful Economic Threat https://avanceeconomico.com/us-sanctions-against-russian-banks-are-the-wests-most-powerful-economic-threat/ Wed, 16 Feb 2022 21:03:00 +0000 https://avanceeconomico.com/us-sanctions-against-russian-banks-are-the-wests-most-powerful-economic-threat/ U.S. President Joe Biden and Russian President Vladimir Putin arrive for the U.S.-Russia Summit at Villa la Grange in Geneva, Switzerland June 16, 2021. Saul Loeb/Pool via REUTERS Join now for FREE unlimited access to Reuters.com Register LONDON, Feb 16 (Reuters) – For NATO members, the most potent measure against Russia if it invades Ukraine […]]]>

U.S. President Joe Biden and Russian President Vladimir Putin arrive for the U.S.-Russia Summit at Villa la Grange in Geneva, Switzerland June 16, 2021. Saul Loeb/Pool via REUTERS

Join now for FREE unlimited access to Reuters.com

LONDON, Feb 16 (Reuters) – For NATO members, the most potent measure against Russia if it invades Ukraine would be U.S. sanctions cutting Russian state banks off the dollar, according to Russian leaders, bankers and former senior US sanctions officials. The United States has warned that Russia could invade as early as this week. Moscow denies having such plans, but says the West must take its concerns about NATO expansion seriously. read more Washington and its allies in Europe are finalizing a sweeping sanctions package should Russia launch an invasion, according to US and European officials. read more The US package would expand a technology export ban to include all goods made with US components or software, as well as proposed sanctions against specific Russian billionaires. But sanctions experts say that more than any other measure, aggressive action against Russian state banks would hit its economy the hardest. “Banking sanctions are the most impactful action the United States can take in the short term,” said Brian O’Toole, former senior adviser to the director of the Office of Foreign Assets Control, or OFAC, at the U.S. Treasury Department, that designs and manages the implementation of sanctions. Proposed sanctions against Russian banks would prevent them from transacting in US dollars, essentially freezing any dollar-denominated assets or liabilities held by banks at home and abroad. Russian Finance Minister Anton Siluanov said on Wednesday that sanctions against Russian banks would be “unpleasant” and lead to a spike in volatility, but said the state would ensure that all deposits with banks and all transactions, including in foreign currencies, are secure. Russia’s abundant hard currency reserves – which currently stand at $635 billion – would help protect against the potential hit, he said. Asked about possible sanctions against Russian state banks, Kremlin spokesman Dmitry Peskov told Reuters that Russia was “preparing for unpredictable actions” by the United States “by protecting itself against any risk “.

He said: “We might get the impression that all this information noise and all these claims that Russia is about to attack Ukraine are made to contain Russia further and create a reason to impose new sanctions – and so they talk about these hellish sanctions.” Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington, said that even if Russia has enough reserves, the potential measures “could cause a run on deposits. This will certainly have a strong impact on the national financial system. This will increase the risk of financial instability, including widening spreads and a sell-off of the ruble. U.S. sanctions far exceed the power of any other jurisdiction, as the White House can potentially impose secondary sanctions on any foreign bank that continues to do business with these institutions, said O’Toole and finance and security expert Tom Keatinge at the Royal United Services Institute, a London-based think tank. The White House did not respond to requests for comment on secondary sanctions. Shares of banking giant Sberbank (SBER.MM) and smaller rival VTB (VTBR.MM) both fell last week ahead of sanctions, although they recouped some losses after Russia said on Tuesday that some troops stationed near the borders with Ukraine were back at base after completing drills, Sberbank holds almost half of Russia’s 21 trillion rubles in deposits and, along with state lenders VTB, Gazprombank and Rosselkhozbank , accounts for nearly 60% of the country’s banking assets. GOING HEAVY Sberbank, VTB and the Russian Central Bank declined to comment. Gazprombank and Rosselkhozbank did not respond to requests for comment. “Abolishing Sberbank would have massive ramifications,” O’Toole added. The nature of the sanctions would likely depend on the scale of a Russian invasion. A Russian invasion limited to an incursion into the rebel Donbass region of eastern Ukraine, for example, could mean the US has scaled its targeting of Russian state banks to maintain greater deterrence. , potentially keeping Sberbank to the end, said Daniel Fried, a former State Department coordinator for sanctions policy in the Obama administration. But “if the Kremlin goes big, we might as well, and we might go big anyway,” Fried said. Sanctions on the banks would in part be aimed at forcing Russia’s central bank to dip into its hard currency reserves in order to bail out banks and keep them afloat, O’Toole and Fried said. The central bank declined to comment on hard currency reserves and sanctions. Russia has few defenses to withstand a US-led attack on its financial stability. Strong currency reserves, high oil prices and a low debt-to-GDP ratio of 18% in 2021 put it in a good position to face further tightening of existing sanctions, said Chris Weafer, director of MacroAdvisory, a firm consultancy based in Moscow.

In addition, Russian state banks reduced their exposure to Western markets when the US and EU imposed limited sanctions on VTB and Sberbank in retaliation for Russia’s annexation of Crimea in 2014. , which limited their ability to take on debt.

Join now for FREE unlimited access to Reuters.com

Today, proposed sanctions against state banks would include a system of waivers, licenses and liquidation periods to ensure that payments for dollar-denominated commodity contracts and debt payments can be made. , sanctions experts said.

Russian officials have largely focused on threats to cut Russia off from the SWIFT financial messaging system in the event of war. But US and European officials said last week the move was now off the table amid concerns from European lenders that it could mean billions of dollars in outstanding loans they have in Russia would not be repaid. . Read more

DOLLARS THE KEY Sberbank chief executive German Gref has previously brushed off reports that US sanctions could prevent Moscow from converting rubles into dollars on the grounds that he believed it was “impossible to execute”. Two senior Russian bankers interviewed by Reuters said they expected any targeted bank to escape the worst of the impact by converting their dollar holdings into euros. Former senior US sanctions officials, however, said that confidence was misplaced, as dollars would still have to pass through a US clearing bank for conversion. “Anything denominated in dollars has to go through the United States and once you do it’s blocked,” O’Toole said. These sanctions, he said, could also lead to the freezing of dollar accounts held abroad by Russian state banks in the correspondent. Igor Yurgens, vice president of the Russian Union of Industrialists and Entrepreneurs, a powerful lobby group for Russian businesses, told Reuters that Russia’s central bank was working on a correspondent account program. with China to convert cash that could help mitigate the impact of sanctions. “Everything would be difficult, but it won’t fall apart,” he said. The Russian authorities “have conducted technological stress tests and believe that they will be fine for a while”. Sergey Aleksashenko, a former vice president of the Russian central bank currently living in exile in the United States, said he believed the sanctions threats from the West were nothing more than an escalation of virtual war or information between Russia and the West. In this standoff, “Putin’s weapon is (the movement of) tanks and the West’s is about sanctions. It’s all part of a big game,” he said. But one of Russia’s top 50 billionaires interviewed by Reuters warned that political maneuvering between Moscow and Washington could lead to conflict and economic retaliation. “Everyone has played a virtual game… But then all of these virtual events can become facts of life.” “The sanctions will have serious economic consequences,” he said.

Join now for FREE unlimited access to Reuters.com

Reporting by Catherine Belton Additional reporting by Katya Golubkova in Moscow Editing by Jonathan Boyle and Alistair Bell

Our standards: The Thomson Reuters Trust Principles.

]]>
Angola’s economic growth expected to be ‘moderately positive’ in 2022 as non-oil sectors continue to recover and oil production stabilises, IMF says https://avanceeconomico.com/angolas-economic-growth-expected-to-be-moderately-positive-in-2022-as-non-oil-sectors-continue-to-recover-and-oil-production-stabilises-imf-says/ Fri, 11 Feb 2022 11:15:52 +0000 https://avanceeconomico.com/angolas-economic-growth-expected-to-be-moderately-positive-in-2022-as-non-oil-sectors-continue-to-recover-and-oil-production-stabilises-imf-says/ Angola’s economic growth is expected to be “moderately positive” in 2022 as non-oil sectors continue to recover and oil production stabilizes, the International Monetary Fund (IMF) said on Thursday, saying the recovery that began in 2021 is expected to pick up. to chase. This year. The multilateral lender said high oil prices and strong non-oil […]]]>

Angola’s economic growth is expected to be “moderately positive” in 2022 as non-oil sectors continue to recover and oil production stabilizes, the International Monetary Fund (IMF) said on Thursday, saying the recovery that began in 2021 is expected to pick up. to chase. This year.

The multilateral lender said high oil prices and strong non-oil revenue would have generated a substantial overall fiscal surplus in 2021. High oil prices have also led to a large current account surplus, a stronger exchange rate and adequate international reserves.

IMF Managing Director Kristalina Georgieva

Angola’s non-oil sector began to grow last year as oil production fell. Non-oil GDP recorded an average growth of 5.2% in the first three quarters of 2021.

“Inflation, driven by high global food prices, has been around 27% year-on-year since October. The central bank maintained tight monetary conditions in response, and the government took steps to facilitate food imports. Inflation is expected to gradually decline over the course of 2022, in line with the expected decline in global food prices,” an IMF spokesperson said. Today News Africa in Washington DC. The spokesperson added that with debt levels still high, fiscal policy will remain tight.

“The authorities’ responsible fiscal policies as well as past debt reprofiling have helped preserve debt sustainability and enabled the allocation of resources to address the economic and health crises. Going forward, key debt indicators, such as the debt-to-GDP ratio, will improve rapidly, although vulnerabilities will remain,” the spokesperson said.

“The IMF supported the authorities’ economic reforms through a three-year EFF extension arrangement; this program concluded successfully – despite many challenges, including COVID-related shocks – with the completion of the sixth and final review on December 22, 2021. The authorities have publicly stated that they are not currently considering request a follow-up program from the Fund.

“Key reforms ahead focus on maintaining the fiscal stance that reduces debt vulnerabilities and diversifying the Angolan economy away from oil dependence by pursuing far-reaching reforms to strengthen governance, improve business environment and promote private investment. At the same time, the authorities are strengthening their monetary policy framework to deal with inflationary pressures,” the spokesperson said.

Simon Atebanbsp

Simon Ateba is chief White House correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the US government, the United Nations, the International Monetary Fund, the World Bank, and other financial and international institutions in Washington DC and New York.

]]>
The Federal Reserve is just one part of our complex economic factors https://avanceeconomico.com/the-federal-reserve-is-just-one-part-of-our-complex-economic-factors/ Wed, 09 Feb 2022 12:27:22 +0000 https://avanceeconomico.com/the-federal-reserve-is-just-one-part-of-our-complex-economic-factors/ “I think there is enough room to raise interest rates without threatening the labor market.” Fed Chairman Jerome Powell’s January 26 statement following the last meeting of the Federal Reserve’s Open Market Committee signals an end to ultra-low interest rates and the huge amount of easy money injected into the economy. According to Powell, the […]]]>
“I think there is enough room to raise interest rates without threatening the labor market.”

Fed Chairman Jerome Powell’s January 26 statement following the last meeting of the Federal Reserve’s Open Market Committee signals an end to ultra-low interest rates and the huge amount of easy money injected into the economy.

According to Powell, the Fed “is okay” to raise interest rates in March. The central bank is already reducing its sustained purchases of Treasury bills and mortgage-backed bonds.

Stock markets have reacted with volatility, but not drastic declines, so far. A major drop could well occur, given the current extraordinary situation.

The financial collapse and recession of 2007-2008 provide a relatively recent basis for comparison. This crisis was the result of extreme speculation in mortgage-backed securities in the United States and quickly became global.

Advertising

The Great Depression provides important historical context. The stock market crash of 1929 and extreme U.S. protectionism sparked a decade-long hardship.

Along with great human suffering, the Great Depression fueled the rise of Nazism in Germany. The fundamental lessons of this period remain profound.

The stock market crash of 1929 was sudden and steep. Since peaking at 381.17 on September 3, US stocks have lost 25% of their value in two days.

November brought a recovery, but it proved short-lived. Stocks drifted to an all-time low of 41.22 in July 1932. At the height of the selling frenzy, they traded in volumes not seen again until the late 1960s.

Stocks did not return to the 1929 peak until 1954, contrary to more recent experience. High levels of public distrust and hostility toward bankers have defined American political life for decades.

After the crash of 2007, banks went bankrupt and others only remained solvent thanks to emergency injections of federal funds. The Federal Deposit Insurance Corp., founded during the Great Depression, proved up to the task of protecting individual depositors.

The 2008 bankruptcy of investment bank Lehman Brothers underscored the depth of the crisis. Government intervention, including liquidity, was then crucial for the recovery.

Commercial banks have become more regulated again, with capital requirements raised as part of the bailout. In 2010, the Dodd-Frank Act came into effect, including Paul Volcker’s landmark initiative to separate trading funds from investment banking funds.

Volcker, as chairman of the Fed, defeated inflation in the early 1980s. Rising inflation is a major political concern today.

The US central bank conducted aggressive bond purchases. Traditionally, the money supply and interest rates have been the main financial tools. The Fed now controls a relatively small share of the total dollar. At the same time, the dollar’s global reserve role facilitates huge bond purchases.

Finance is only one component of our complex economy. Money is a universally accepted medium of exchange, but tangible value results from the work of a wide range of people.

Here’s what we the people should remember. First, take pride in your work. The United States has the most productive economy in the world. Our gross domestic product doubles approximately every two decades.

Second, as a citizen, be active. Government reforms reflect public pressure. There must be serious and sustained public scrutiny of financial activities.

Third, as an investor, do your homework, starting with the classic book by Dodd and Graham, Wall Street professor and genius respectively, first published in 1934, regularly revised. You can read this while listening to the media.

However, why not avoid this distraction? Non-stop electronic media is a bad investment.

Read more: Benjamin Graham and David Dodd, “Security Analysis”

Arthur I. Cyr is the author of “After the Cold War: American Foreign Policy, Europe and Asia” (NYU Press and Palgrave/Macmillan). Contact [email protected].

Arthur Cyr

Journalist

]]>
US Labor Market Defies Omicron Push; economy on solid footing ahead of rate hikes https://avanceeconomico.com/us-labor-market-defies-omicron-push-economy-on-solid-footing-ahead-of-rate-hikes/ Fri, 04 Feb 2022 17:10:00 +0000 https://avanceeconomico.com/us-labor-market-defies-omicron-push-economy-on-solid-footing-ahead-of-rate-hikes/ Non-farm payrolls increase by 467,000 in January Job gains spread across all industries The economy added 709,000 jobs in December and November Unemployment rate at 4.0%; participation rate at 62.2% The average hourly wage increases by 0.7%; up 5.7% year-on-year WASHINGTON, Feb 4 (Reuters) – The U.S. economy added far more jobs than expected in […]]]>
  • Non-farm payrolls increase by 467,000 in January
  • Job gains spread across all industries
  • The economy added 709,000 jobs in December and November
  • Unemployment rate at 4.0%; participation rate at 62.2%
  • The average hourly wage increases by 0.7%; up 5.7% year-on-year

WASHINGTON, Feb 4 (Reuters) – The U.S. economy added far more jobs than expected in January despite disruption to consumer-facing businesses due to a rise in COVID-19 cases, indicating underlying strength which should support the Federal Reserve’s start-up expansion to raise interest rates.

The Labor Department’s closely watched jobs report on Friday also showed that 709,000 more jobs were added in November and December than earlier estimates. Wage gains accelerated last month and the labor pool has widened.

The upbeat report ended days of anxiety among economists and White House officials who had frantically tried to prepare the country for a disappointing payroll number.

Join now for FREE unlimited access to Reuters.com

“This is a strong jobs report,” said Chris Low, chief economist at FHN Financial in New York. “The odds of stifling inflation without a recession look better today than yesterday.”

Non-farm payrolls increased by 467,000 jobs last month, according to the establishment survey. Economists polled by Reuters had forecast that 150,000 jobs would be created in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.

Employment stands at 2.9 million jobs below its pre-pandemic peak.

Part of the surge in payrolls likely reflects the low number of layoffs following the holiday hiring season due to labor shortages. Although the decline in real employment in January was consistent with previous years, there were big differences at the industry level.

The government also reported that 374,000 more jobs had been created in the 12 months to March 2021 than previously.

The resilience of the labor market could alter expectations that economic growth will slow significantly in the first quarter, after consumer spending left 2021 with a whimper. The economy grew at an annualized rate of 6.9% in the fourth quarter. Growth estimates for the first quarter are below a 2% pace.

Strong job gains, accompanied by the largest annual wage increase since May 2020, pave the way for the U.S. central bank to hike interest rates in March by at least 25 basis points to rein in the high inflation. Economists expect seven rate hikes this year.

“The report is unequivocally good for the economy, but not good for markets, as the strength in the numbers presents another data point that supports more aggressive Fed action,” said Cliff Hodge, chief investment officer at Cornerstone. Wealth in Charlotte, North Carolina.

Stocks on Wall Street were mixed. The dollar (.DXY) appreciated against a basket of currencies. US Treasury prices fell.

Reuters Charts Reuters Charts

THE LABOR POOL IS EXPANDING

People line up to enter the Nassau County Career Fair at the Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014. REUTERS/Shannon Stapleton/File Photo

Economists braced for a weak jobs report as the government investigated company payrolls in mid-January when Omicron infections peaked. The Labor Department said 3.616 million people who had jobs were absent during the survey week due to illness.

Workers who are sick or in quarantine and are not paid during the payroll survey period are counted as unemployed in the establishment survey, even if they still have a job. The lowest-paid hourly workers in sectors like health, recreation and hospitality, which typically don’t have paid sick leave, have been hardest hit by the winter surge of COVID-19.

According to the latest government data, paid sick leave was available to 79% of civilian workers in March 2021.

The leisure and hospitality industry added 151,000 jobs in January. Employment in the health sector increased by 18,000. Gains were recorded in retail trade, professional and business services, and transportation and warehousing and wholesale trade.

Manufacturing payrolls rose by 13,000, but construction employment fell by 5,000, likely due to freezing temperatures. The government payroll has increased by 23,000 jobs.

Employment could rise further as coronavirus infections continue to decline. Initial jobless claims fell for the second week in a row last week.

The United States is reporting an average of 354,399 new COVID-19 infections per day, down sharply from more than 700,000 in mid-January, according to a Reuters analysis of official data.

The government has introduced new population estimates for the household survey, from which the unemployment rate is derived. The new assumptions had a negligible effect on the unemployment rate

rate, which rose to 4.0% from 3.9% in December.

The labor force participation rate, or the proportion of working-age Americans who have or are looking for a job, rose to 62.2% due to changes in the composition of the population, from 61.9 % in December. The workforce increased by 1.393 million people. The employment-to-population ratio fell from 59.5% in December to 59.7%.

Reuters Charts

Other household survey details were solid. Employment increased by 1.199 million. The survey counts people who are employed as employees, whether or not they were paid during the survey week if they were temporarily absent from work due to illness, bad weather , holidays, social conflicts or personal reasons.

A broader measure of unemployment, which includes people who want to work but have given up looking and those working part-time because they can’t find a full-time job, fell to 7.1% vs. 7.3% in December.

With some lower-paid hourly workers at home, wage growth accelerated in January. The average hourly wage rose 0.7%, taking the annual increase to 5.7%, the biggest rise since May 2020. But the Omicron surge shortened the average workweek to 34, 5 hours compared to 34.7 hours in December.

“Overall, the U.S. economy appears to be on solid footing,” said Noah Williams, associate fellow at the Manhattan Institute.

Join now for FREE unlimited access to Reuters.com

Reporting by Lucia Mutikani Editing by Chizu Nomiyama and Paul Simao

Our standards: The Thomson Reuters Trust Principles.

]]>
Eswar Prasad explains how digital currencies will disrupt finance https://avanceeconomico.com/eswar-prasad-explains-how-digital-currencies-will-disrupt-finance/ Thu, 03 Feb 2022 08:15:00 +0000 https://avanceeconomico.com/eswar-prasad-explains-how-digital-currencies-will-disrupt-finance/ Discussions with central bankers at a conference a few years ago prompted economist Eswar Prasad to start writing what he planned to be a small volume on how digital currencies could affect the implementation of monetary policy. As he delved deeper into the world of digital technologies such as blockchain, cryptocurrencies, and stablecoins, he began […]]]>

Discussions with central bankers at a conference a few years ago prompted economist Eswar Prasad to start writing what he planned to be a small volume on how digital currencies could affect the implementation of monetary policy. As he delved deeper into the world of digital technologies such as blockchain, cryptocurrencies, and stablecoins, he began to realize their potential to revolutionize, and potentially destabilize, financial markets and the international monetary system.

So much for the thin volume. Instead, Prasad wrote the The future of money: how the digital revolution is transforming currencies and finance, a 500-page book that has become a roadmap for fund managers, market strategists and others seeking to understand this new world. With a background in global trade, monetary policy and financial regulation, including a stint as a senior International Monetary Fund official on China, Prasad has spent his career studying the global economic landscape. Currently a professor of economics at Cornell University and a senior fellow at the Brookings Institution, he recently spoke with Barrons on the “speculative mania” surrounding Bitcoin and the opportunities and risks inherent in abandoning traditional forms of money and finance. An edited version of our conversation follows.

Barrons: China seems to have taken the lead in launching a digital currency. Does this put the United States at a disadvantage and threaten the reserve status of the dollar?

Esvar Prasad:I don’t see a digital yuan posing a big threat to the US dollar. I don’t think that’s a huge first-mover advantage, nor does it mean that China will set the standard for the world. The traditional use case for a central bank digital currency, or CBDC – to increase financial inclusion – is weak in China as AliPay and WeChat Pay [payment apps owned, respectively, by


Alibaba Group Holding
(ticker: BABA) and


Tencent Holdings
(700.Hong Kong)] do a fantastic job of providing digital payments. China’s motivation for the digital yuan is different. [China] worries that the dominance of these two payment providers is limiting innovation, but also making them economically and politically too powerful for Beijing’s comfort.

As we head into a world [of digital currencies] where China’s cross-border interbank payment system can communicate more effectively with systems in other countries, we can see less need for the US dollar as a currency in international trade. As a payment currency, the US dollar could lose some of its importance, although it will remain the dominant currency. But a reserve currency not only needs economic size and financial might, but also an institutional framework – an independent central bank, rule of law, institutional checks and balances – that preserves the confidence of foreign investors. China has made it clear that it will not undertake any significant institutional reform. Even if the renminbi were to gain some more ground, I don’t see the renminbi seriously threatening the dollar.

How will digital currencies reshape financial markets and central banking?

We are on the threshold of major changes in national and international financial markets. Digital transformation has made it much easier to innovate new products and services at scale and made them widely accessible. This will have major repercussions on the structure of markets and financial institutions. By extension, this will have important implications not only for the nature of money and monetary creation, but also for monetary policy, its transmission and implementation, as well as for financial stability and the international monetary system.

Let’s talk about the details. How will the banking industry fare as a result of this transformation?

Commercial banks face serious challenges to their business models due to these new forms of financial intermediation and new technologies, such as blockchain-based payment systems and other fintech payment platforms, which handle payments international. It’s traditionally been a big profit center for multinational banks, and it’s going to get a lot more competitive.

The emergence of new financial institutions and platforms will improve competition, foster innovation and reduce costs, thereby improving the functioning of the financial system. But it will also pose significant complications for regulation and financial stability. The weakening of banks carries its own risks, given their important role, including in credit creation.

What does this mean for monetary policy?

Traditional instruments in normal times, such as the discount rate and the target federal funds rate, may have less effect if commercial banks have a reduced role in financial systems. When a central bank changes policy rates that it directly controls, it affects interest rates on commercial bank deposits and loans in a reasonably well-understood way. The corresponding effects on the lending rates of other institutions and platforms are much less clear. It is therefore more difficult for a central bank to manage the economic variables that matter to it: inflation, unemployment and [gross domestic product] growth.

It’s also unclear how effective the Fed can be as a lender of last resort if institutions outside its direct regulatory jurisdiction play a bigger role in financial markets. For example, it would be difficult for the Fed to provide access to emergency liquidity facilities for fintech platforms it does not regulate. The rise of digital finance based on decentralized blockchains could accelerate these changes and, for all its benefits, also pose challenges to monetary and financial stability.

What scenario would lead to instability?

We can see Facebook [


Meta Platforms
; FB] Where


Amazon.co.uk
[AMZN] issue stablecoins [digital currencies pegged to a national currency, such as the dollar] which get a lot of traction within their own ecosystem, but they could also issue their own unsecured currencies which could compete with existing fiat currencies. Maybe the dollar will not be threatened, but if you have a digital yuan, a digital dollar, and also a Facebook or Amazon coin available worldwide, it could pose an existential threat to the currencies of small economies or those who don’t. we don’t have a credible central bank. We could have a real upheaval in the international monetary order. There is also the risk that many of these other currencies will be used for illicit trade, and it becomes much more difficult to regulate them. After all, Bitcoin knows no borders.

Cryptocurrencies have lost around $1 trillion in market value since November. Is this the beginning of the end?

Bitcoin was intended to serve as an anonymous medium of exchange that could enable financial transactions without relying on central bank money or trusted third-party intermediaries. Bitcoin failed in this regard, so it has no intrinsic value. Its value is based solely on investor confidence, which seems to be based on its scarcity. But scarcity itself cannot be a sustainable source of value for a digital asset. The recent crash in the price of Bitcoin and other cryptocurrencies as the Fed prepares to hike rates clearly shows that Bitcoin is also not a hedge against inflation, as some had assumed. There are legitimate fears that this is a speculative mania that could end badly. More price volatility is a certainty.

Could the sale create wider ripples in the crypto ecosystem?

The prospect of many retail investors being burned is a serious risk. If brilliance emerges from the cryptocurrency revolution, it could deter some of the blockchain-based decentralized finance developments that have significant benefits.

Bitcoin’s true legacy is blockchain technology. It is a wonder. Blockchain technology will give us the potential to improve various aspects of public governance. For example, India is considering putting land ownership records on a digital ledger, providing much greater security, resilience and transparency. [Blockchain] is also initiating the creation of decentralized finance, which has enormous potential to create new products and services and make them easily accessible by connecting savers and borrowers through fintech platforms. This could, for example, lead to tailor-made financial products and services at lower cost for the less well-off. This is going to be a fundamental transformation of finance.

How could this go wrong?

The whole point of decentralized finance is that no one institution becomes very large, but there can be unintended consequences when certain operators dominate the system. [There’s also the risk that] huge disparities in financial and digital access and digital literacy could be exacerbated rather than mitigated. More importantly, if you start to have central bank digital currencies and companies such as Facebook and Amazon issuing stablecoins gaining traction, governments and big corporations could become even more intrusive in our lives. There’s a lot of promise for better economic outcomes, but also the risk that we’re tipping into a much more dystopian world than the one we already live in.

What are the geopolitical risks created by a world where economies depend on digital currency?

Finance is the engine of any great economy. We could prepare for a world where cyber warfare becomes the primary battleground for geopolitical domination. This creates a huge amount of vulnerabilities because payment and financial systems are vulnerable, and they could wipe out an economy or an entire country if constantly hacked.

Thank you Esvar.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

]]>
The conundrum of growth in Papua New Guinea https://avanceeconomico.com/the-conundrum-of-growth-in-papua-new-guinea/ Fri, 21 Jan 2022 22:56:00 +0000 https://avanceeconomico.com/the-conundrum-of-growth-in-papua-new-guinea/ Author: Stephen Howes, ANU National elections will be tenuous in Papua New Guinea (PNG) in mid-2022. Elections take place every five years and are very popular events. Although voting is voluntary, turnout is just lower than in Australia, where voting is compulsory. An extraordinary number of political candidates are vying for elections. The average number […]]]>

Author: Stephen Howes, ANU

National elections will be tenuous in Papua New Guinea (PNG) in mid-2022. Elections take place every five years and are very popular events. Although voting is voluntary, turnout is just lower than in Australia, where voting is compulsory. An extraordinary number of political candidates are vying for elections. The average number of candidates per seat has increased from 8 in 1977 to 30 in 2017.

In the 2017 elections, 111 men but no women were elected. He is possible but special measures are unlikely to be put in place before the 2022 election to ensure that this result is not repeated this year. If not, the only hope left is that at least some of the growing number of women running for office will succeed in the elections.

It is impossible to predict election results, as there are no opinion polls and party structures are very fluid. Corn James Marape, Prime Minister since 2019 when he ousted Peter O’Neill in a midterm vote of no confidence, is the favorite, simply because he is the incumbent.

In each of the last three elections, the incumbent Prime Minister has retained his post. Indeed, PNG law was amended at the turn of the century to require that the party with the most elected deputies has the first chance to form a government coalition. MPs are normally drawn to the Prime Minister’s party. Currently, Marape’s party, PANGU, has 34 MPs, almost three times the size of the next party. There is a high turnover of MPs, but even if there is a contrary move, PANGU will likely emerge from the elections as the largest party, giving Marape the top spot in the top job.

Whoever wins the election will face two key issues. One is COVID-19.

Vaccination rates increased in PNG in October and November 2021 with the takeoff of COVID-19, but there are still very high levels of vaccine hesitancy. According to the latest estimates, only 2.5% of the population are fully vaccinated. PNG will have to navigate 2022 without significant vaccination coverage. COVID-19 hit PNG hard in the second half of 2021 and it is likely that there will be another big wave associated with the introduction of the Omicron variant and possibly the election campaign.

The other problem facing PNG is the desperate need to increase economic growth and create more jobs. COVID-19 is an economic problem and the low level of vaccination in PNG is likely to hamper labor mobility, trade and investment. There could also be other internal interlocks.

Growth took a hit with COVID-19 but was already slow before the pandemic. In the absence of data on gross national income and given the landlocked nature of the extractive (resource) sector, non-resource gross domestic product is the best measure of national economic activity. From 2014 to 2019, this grew in real terms by only 0.9% per year on average. The budget projects this to accelerate to an annual average of 4.4% from 2021 to 2027. How is that unclear.

Perhaps one of the various resource projects currently being negotiated will be finalized during this time and its construction will give the economy a much-needed boost. But with all the uncertainty surrounding the projects currently under discussion, the government is wisely not counting on it.

Growth in government spending this year, including much-needed increases in health spending, will help economic growth, but PNG is running record deficits to support spending in the face of COVID-19. The rapid growth in spending cannot be sustained. Although the latest budget allows for a 3.5% increase in spending after inflation in 2022, it does not allow for any further spending growth through 2027.

The main brake on growth since 2014 has been the shortage of foreign exchange which remains a problem to this day. According to annual surveys, PNG business leaders ranked foreign exchange among their top four concerns every year between 2014 and 2021.

PNG’s central bank has been content to ration currency to protect the exchange rate and its foreign exchange reserves. The government has recently amended the Central Banks Act requiring the Bank of Papua New Guinea to consider growth as well as the inflationary consequences of its policies. Given the disastrous impact of currency rationing on growth in recent years, it is hoped that this will force the Bank of Papua New Guinea to change course and eliminate currency rationing.

Ultimately, whoever wins the 2022 election will find themselves in the odious position of having to exercise fiscal discipline while trying to accelerate economic growth. It won’t be easy.

Stephen Howes is Director of the Development Policy Center and Professor of Economics at the Crawford School of Public Policy at the Australian National University.

This article is part of a EAF Special Feature Series on 2021 in review and the year ahead.

Disclosure: Last year the author served on the PNG Independent Advisory Group (IAG) which made recommendations relating to the Central Banks Act mentioned above.

]]>