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Simplifying a complicated global economy

By Mohamed A. El-Erian

17 Aug 2023 · 3 min read

informed Summary

  1. The global economy has been full of surprises this year, Mohamed A. El-Erian writes in PS. Japan’s GDP growth is currently surpassing that of China, while July retail sales in the U.S. were double the consensus forecast.

CAMBRIDGE – The global economy this year is full of puzzling surprises. Japan’s GDP growth is currently surpassing that of China, and July retail sales in the United States were double the consensus forecast, despite the US Federal Reserve pursuing one of the most concentrated rate-hiking cycles in decades.

In the United Kingdom, wage growth has risen to an annualized rate of 7.8% and core inflation has remained high, even after 14 consecutive rate hikes by the Bank of England (with more to come). Meanwhile, Brazil and Chile have both cut interest rates, diverging from market expectations that the Fed will keep rates high for a prolonged period.

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