Last Week in the Global Economy (23-27 July)

Markets showed mixed sentiments despite a late rally sparked by optimistic statements from European leaders. Underlying issues such as drought, inflation and economic growth are becoming more of a concern for emerging economies.

(Frontier Research does this nifty summary as a part of its overall range of news products, usually for private clients. They scour through the myriad goings on in the global economy so you don’t have to, and bring out what’s relevant from a Sri Lankan non-expert’s perspective. Pretty useful if you’re generally into economics, or just want to get a feel of current hot topics. Here I’ve syndicated their Weekly News Summary with permission.) 

The Week in Global Markets

Asian stocks fell slightly last week on concerns over Greece bailout targets and pessimism over China’s economic growth prospects. However European and US markets rallied after EU leaders made public promises to the effect of doing everything needed to protect the Euro with the Dow Jones seeing its longest weekly advance since January. Crude oil prices recorded a net fall for the week despite a late rally following optimistic news from Europe.

The Week in Economic Views

The United States is also experiencing a serious drought and, though usually more resilient than others to extreme weather, is facing the tough question of countering drought related food inflation by raising interest rates; even though changing monetary policy to accommodate supply shocks is ill advised.

Yet more debate in India about the appropriateness of its current approach to measuring inflation. While so far the arguments have only resulted only in hot air, it is encouraging to see a nation actively engaging in public debate over an impending economic issue.

The concept of ‘state capitalism’ is increasingly gaining recognition as a legitimate economic model. Interesting for Sri Lanka as its economy continues to be administered under a very much ‘visible’ hand.

This Economist chart looks at the gap between the average age of a country’s politicians and the average age of its population. Postulating that the Arab spring suggests a big age gap can be a source of unrest.

Indonesia, despite huge promise of growth, has experienced serious currency depreciation of late, primarily due to a drop in exports to developed markets. Sri Lanka has faced a similar situation without the corresponding consistency in foreign investment.

Over the last few years, South Koreans have steadily become richer and correspondingly more miserable.

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