Рафаэль Жансултанов
The world economy may enter a period of slowing global GDP growth with a steady increase in the consumer price index. Such conclusions can be drawn from the latest June review of the Organization for Economic Cooperation and Development (OECD). Thus, the OECD predicts that the growth rate of the global GDP in 2022 will be 3.0%, which is 1.5 p.p. lower than the forecasts of December last year.
According to the forecast of the organization, the inflation in developed countries will be 9.0%, which is twice as high as the previous value. The acceleration of the consumer prices in developed and developing countries will reduce household disposable income, and living standards and restain global consumption. All this undermines the dynamics of the global economy and causes stagflation risk.
A similar situation in the world was in the 1970s amid the oil embargo imposed by OPEC countries against the developed economies of the world. As a result, from October 1973 to January 1974, the cost of a barrel of oil increased four times from 2.90 to 11.65 US dollars.
Today’s international sanctions affect Russia’s energy sector, which provides 10% of world oil supplies and 16% of world gas exports. As a result, oil is at its maximum value over the past 10 years, and the cost of gas reaches historical values.
In our opinion, in addition to geopolitical tensions, the risks of global stagflation are also affected by the situation in the two largest economies in the world – the United States and the People’s Republic of China. So, according to the observations of former US Treasury Secretary Larry Summers, historically, when inflation in the country exceeded 4.0% and unemployment fell below 4.0%, the American economy entered a recession on the horizon of 2 years. According to the latest data, the consumer price index in the US reached 8.3%, and unemployment dropped to 3.6%. In China, the zero-tolerance policy for COVID-19 slows down domestic growth and disrupts global supply chains.
Against this background, the Central Banks of the world get caught in the crossfire, and to rein in inflation and prevent the recessionary phenomena in the global economy should pursue a more balanced, cautious monetary policy.
For Kazakhstan, the possible strengthening of global stagflationary risks may create certain difficulties. Thus, the possible stagnation of the world economy may lead to a decrease in global demand for some export goods, as well as reduce the flow of foreign investment. In addition, the acceleration of global inflation, especially in food items, may lead to a price response within the country.
