economy
THE GLOBAL CHALLENGE OF HIGH INFLATION It’s easy to frame inflation as a uniquely domestic challenge, with the usual cast of characters to blame for its emergence and persistence, but that would be wrong.
Different countries had different economic responses to the emergence and spread of Covid in those early, uncertain days in 2020. In some places, little to no financial support was provided and instead, the focus was on lockdowns. Elsewhere, such as here in Canada, a blended approach of an early lockdown, ongoing social-distancing policies, and heavy subsidies for households and businesses was adopted. As someone put it early on in the pandemic, it’s a lot easier to fill the economic crater created by Covid with water (vis-a-vis financial support) and have people row across to the other side than to have them arduously climb down one side and make their way
across the crater only eventually to have to figure out how to climb back out again. Whatever the approach, a globally-integrated economy has meant that these policies, along with supply chain issues and a war in Europe, have conspired to yield high inflation everywhere. Here in Canada we’re dealing with an inflation rate of 7%—but we're really only middle of the pack when compared to other G7+ nations. Clearly, the current challenge of inflation is unique to nowhere and will require a coordinated international effort to bring it down again.
INFLATION FRUSTRATIONS FOR ALL OF THE NATIONS
10.0%
9.0%
8.8%
8.5%
8.2%
8.0%
7.0%
7.8% 7.9%
8.0%
7.5%
7.0%
6.1% 6.3%
6.0%
5.8%
5.0%
4.0%
3.4%
3.0%
2.7%
2.0%
1.0%
0.0%
DATA: CONSUMER PRICE GROWTH, YEAR-OVER-YEAR, SELECTED COUNTRIES SOURCE: OECD
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