When driving at night in Zimbabwe, watch out for a pair of eyes on the road and slow down. You may hit a giraffe inside a pothole. So goes an often-told joke.
The world is sailing into a perfect storm as key leaders seem intent on threatening more war, albeit while proclaiming the noblest of intentions. By doing so, they block international cooperation to create conditions for sustainable peace and shared prosperity for all.
The spectre of ‘stagflation’ threatens the world once again. This time, the risk is the direct consequence of political provocations and war, and not simply due to inexorable economic forces.
Stagflation?
Stagflation is a composite word implying inflation with stagnation. Stagnation refers to weak, ‘near zero’ growth, inevitably worsening unemployment. Inflation refers to price increases – not high prices, as often implied.
This week, exactly 20 years ago, world leaders adopted the United Nation’s
Monterrey Consensus. They committed to “Confronting the challenges of financing for development” with a global response and to creating a fully inclusive and equitable global economic system.
“If your only tool is a hammer, every problem looks like a nail”. Still haunted by the clever preaching of monetarist guru Milton Friedman’s ghost, all too many monetary authorities address every inflationary threat or sign they see by raising interest rates.
All too many developing countries have been persuaded or required to prioritize
inflation targeting (IT) in their monetary policy. By doing so, they have tied their own hands instead of adopting bolder economic policies for growth, jobs and sustainable development.
"We started making shampoos and soaps in the kitchen of a friend’s house in 2017. We were five or six girls without jobs, looking for a collective solution, and today we are here," says Letsy Villca, standing between the white walls of the spacious laboratory of Maleza Cosmética Natural, a cooperative that brings together 44 women in their early twenties in the Argentine capital.
All over the world, people expect policies by central bankers trained in economics to have a sound scientific base. But in fact, inflation targeting is an article of faith with neither theoretical nor empirical basis.
Calls, even screams, to fight inflation above all else are getting shriller. Thankfully, even
The Economist (5 Feb. 2022) reminds all,
Fighting inflation could put the world in a slump.
No inflation consensus
International Monetary Fund (IMF) Managing Director Kristalina Georgieva
doubts the world faces a runaway inflation threat. She urges policymakers to carefully calibrate fiscal and monetary policies, with more “specificity”, as not ‘one size fits all’.
Accustomed for decades to recurring economic crises, and hit hard in recent years by a steady loss of purchasing power, Argentines were informed on Friday Jan. 28 of a last-minute agreement with the IMF which, in the words of center-left President Alberto Fernández, takes "the noose off their necks".
Inflation hawks are winning the day. The latest ‘beggar thyself’ race to raise interest rates has begun. This ostensibly responds to the spectre of runaway inflation, supposedly retarding economic growth and progress, and thus threatening central bank ‘credibility’.
Many countries around the world have punished most of the African continent for the scientific discovery of the Omicron variant through the imposition of travel bans.
When face-to-face Cabinet meetings resumed in Jamaica following more than a year of virtual meetings due to COVID-19, Ministers lined up to have their immunisation cards inspected.
On the streets of Beirut, Hadi Hassoun begs for a few pounds to feed his five children. He has little hope of a job, especially now that the economic crisis in Lebanon has destroyed wealth.
Immediately after its release, the Squid Game went viral, grabbing the attention of the world's entertainment stage. The grotesque and hyper-violent thriller has reportedly become Netflix's biggest show, the world's most-watched and the most-talked-about streaming entertainment. Is it a case of art imitating life?
“The outlook for LDCs is grim”. The latest United Nations (UN)
assessment of prospects for the least developed countries (LDCs) notes recent setbacks without finding any silver lining on the horizon.
Promises unkept
Half a century ago, LDCs were first officially recognised by a
UN General Assembly resolution. It built on research, analysis and advocacy by the UN Conference on Trade and Development (UNCTAD).
Last week’s annual meetings of the International Monetary Fund (IMF), World Bank and G20 finance ministers illustrated that despite a historic debt crisis sweeping across developing countries and their urgent need for external financing for health and economic recovery, global economic institutions governed by rich countries do not possess the political will to deliver meaningful solutions. The inadequacy of the G20’s debt relief framework, which has failed to restructure sovereign debt since its inception, stands without change or any fresh effort to mobilize private sector participation in debt relief.
The bogey of inflation has been revived. Dubious pre-pandemic economic progress, fiscal constraints and vaccine apartheid were bad enough. Now, ostensibly anti-inflationary measures also threaten recovery and sustainable development.
In September 2021, children in the northern hemisphere returned to school after the summer break. For some, the end of the holidays signaled a return to normalcy and to the joys of learning after facing months of school closures due to the Covid-19 pandemic. For the majority of children in the Global South, however, the return to reality looked grimmer.
The guardians of the global economy convened in Washington this week to discuss their latest global growth forecasts. The World Bank-IMF Board of Governors meetings have been squarely focused on the global response to COVID-19, with economists warning of slowing momentum in wealthy nations and grossly uneven recoveries across the developing world.
Rondrotiana Barimalala is a climate researcher at the University of Cape Town in South Africa and a lead author for the IPCC report to the recently released Intergovernmental Panel on Climate Change (IPCC)
report titled
Climate Change 2021: The Physical Science Basis.