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Secular Inflation

Global Voices

By Michael Spence, A Nobel laureate in economics: After enjoying a long period of deflationary conditions, the global economy is being pushed by a wide range of forces toward a new and more difficult equilibrium.

The post-pandemic economy’s high inflationary pressures are partly powered by secular trends and forces, many of which are operating on the supply side. While there are also transitory factors – such as supply-chain disruptions and bottlenecks and China’s zero-COVID policy – presumably will decrease at some point. But the secular trends are likely to lead to a new equilibrium in many economies and global financial markets. In manufactured goods and intermediate products (a substantial share of the tradable part of the global economy), we are emerging from a long period of deflationary conditions, which had been driven by the introduction of massive amounts of previously unused, low-cost, productive capacity in emerging economies.

Secular Inflation

Secular Inflation

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