物価上昇の無い世界経済?
The price falls draw a "new reality" that does not exclude the formation of bubbles
Un mundo sin inflación
Las caídas de precios dibujan una "nueva realidad" que no excluye la formación de burbujas
Alicia González 26 MAY 2013 - 00:00 CET
A world without inflation
The price falls draw a "new reality" that does not exclude the formation of bubbles
Alicia Gonzalez 26 MAY 2013 - 00:00 CET
The former secretary of the U.S. Treasury in the nineties and renowned economist, Larry Summers, in his lectures usually remember that economists are the only professionals who are asking the same question over and over again, and it always varies response. Nearly five years after the outbreak of the crisis, an old question has refocused the interest of experts: what will happen to inflation? And this time no one seems to have a clear answer.
If the unprecedented liquidity by central banks in response to the gravity of the crisis caused, initially, the fear of hyperinflation, now the main threat seems just the opposite. In the minds of many experts draw the model in Japan, where authorities have two decades fighting unsuccessfully against deflation and the economy is caught in a liquidity trap. The jury has not yet issued its verdict and the bets are still open.
During the Great Recession that began in the summer of 2007, inflation has had an atypical behavior. In its April forecast, the International Monetary Fund (IMF) devoted the entire 17 pages of chapter three to analyze what is happening to prices and wondered whether inflation "is definitely gagged or just asleep." The IMF recognizes that falling prices were "too small, compared to other recessions," attributed to the fact that inflation expectations better anchored and the fact that the relationship between inflation and unemployment-the famous Philips curve has reduced and the prices are far less sensitive to variations in the activity.
"Ultimately, the dog did not bark because the combination of anchored expectations and the credibility gained by central banks has caused inflation to move much more slowly than the cartoons of the seventies may suggest. Inflation has been gagged. And barring that central banks will maintain the independence to respond appropriately to the risks that arise, the dog probably remain silent, "IMF economists concluded.
The prices fall in developed countries and emerging
The most recent price developments suggest that the fall in inflation has increased in April. The consumer price index globally, that makes JP Morgan, last month stood at 2%, three tenths less than in March, marking the largest monthly decline in the series since December 2008, when the financial crisis crossed one of his moments of greatest intensity.
That hidden global average price levels disparate and in some cases, as in the red zone. Inflation in the euro area stood at 1.2% in the U.S., at 1.1%, in India increased from 6.3% to 4.9% in a single month, and China round 2 , 3%. But in Sweden, prices have three consecutive months in negative territory, to -0.4% in April, and in Switzerland, lead prices falling steadily for over a year.
Many seasonal factors may explain the April monthly decline, as the Easter holidays, in the case of developed countries, or the end of the celebrations for the Chinese lunar new year, in the emerging. "The decline in raw material prices in recent months and a recovery of GDP lower than expected have had a powerful negative momentum on overall rates of inflation," JP Morgan recalled in his note to clients. "Our models suggest a slight increase in prices in May, but the tendency to disinflation will prevail until the end of the year," he concludes.
The distinction is important. One thing is disinflationary trends and other deflation, the IMF defines as continued price decline for two consecutive semesters, which means that Switzerland already be in deflation. Not to mention Japan since the early nineties.
The credibility of central banks helps anchor expectations
Most analysts rule out that this is going to be the way forward by developed countries, although they admit that the risk exists. "I think it can be, occasionally, in some euro zone countries and, less likely, also in the U.S.," he predicts Ilan Goldfajn, chief economist at Itaú Unibanco. By email, Toby Nangle, Threadneedle, said "we have seen deflation in a number of eurozone countries is clearly a sign of concern" and "expanding the monetary authorities balances near-maximal levels, the impact of these disinflationary tensions remains to be seen whether it will be something malignant or benign. "
However, there are those who say that the dog is not well put the muzzle and is merely waiting crouched act. Ben Lord, of M & G Investments, argues that they are underestimating the upside risks to inflation. "With central banks working harder than ever to generate growth and dissipating his attention to policies are often not tested, the possibility of losing control over inflation increases." Bundesbank hawks certainly could not agree more with that analysis, but in Europe are clearly minority.
It has also changed the perception of risk in emerging countries, where the trend is not going that far, but in the same direction. Unlike other episodes, the decline in prices has become a global phenomenon, affecting both the developed and the emerging, although the starting points are very different. The average of the 56 countries included in the emerging inflation Monitor Capital Economics reveals that emerging consumer prices in April stood at 4.3% and core inflation, which excludes food and energy, fell to 3.5 %. Very low levels by historical standards.
"What is happening in emerging countries is that we are seeing a slowdown in GDP, and this is reflected in inflation. We see in India, China, Mexico, Chile, in Colombia ... "says Ilan Goldfajn from São Paulo. "The hypothesis, yet to be confirmed, is that the slowdown in the developed countries took to get to these economies, but eventually their growth has been affected," he says.
"Inflation has been gagged" sentenced last April IMF
For Jean-Michel Six, chief European economist at Standard & Poor's, the slowdown in the emerging results from the tight monetary policy that these countries implemented in 2010, when after help lift the global economy out of recession, inflation shot and forced them to tighten their rate policies. "Thanks to the success of emerging central banks in their fight against inflation, we have entered a virtuous circle of more moderate prices of raw materials, which in turn is reducing inflationary pressures in developed countries", explained in conversation telephone from London.
Whatever the ultimate explanation, the fact is that this scenario explores the structural factors that led to the Great Moderation in prices that we have experienced in recent decades globally. On the one hand, the absence of domestic demand in emerging countries keep prices low raw materials, one of the factors driving the growth of global inflation. On the other, the lower growth environment will reduce wage pressures in those countries, whose growing weight in global trade makes them exporters, in turn, the dynamics of prices in their countries. "We do not expect any of these exogenous factors diluted in the near future," says Marco Valli, chief eurozone economist at UniCredit, in its latest report.
Nor should underestimate the importance of the credibility gained by central banks in recent years in controlling prices, a factor in influencing all economists and demonstrates critical at a time when the monetary authorities have flooded the market liquidity to try to counteract the effects of the crisis. "The great credibility gained by central banks in the past two decades has been able to solidly anchor inflation expectations. This has dramatically reduced the margin for the second-round effects and has contributed key to reducing inflation volatility, "says Valli. But the Italian economist points-following brochures rhetoric that the credibility stock-current and future credences not guarantee ensures that this "can be reversed." The same warning throwing the IMF in its report, concluding that inflation-dog will be "gagged" by ensuring "the independence of central banks" to combat the risks posed by the economic situation. Just that the new powers are taking the monetary authorities on the financial sector with macroprudential policies to be defined-leave that independence in the air, but is ensured on paper.
There are those who attribute the current quicksand by inflation walking precisely the success of central banks in controlling prices. Although the work of the monetary authorities also flawed. "Central banks are not going to die of success because they have not managed to stabilize the financial system and should have done in the past and have been shown to control consumer prices does not prevent the formation of bubbles that end up threatening the entire system, "says Six, by S & P.
Experts do not rule out specific episodes of deflation
The past casts very specific examples coming from that thesis. The Spanish housing bubble, without going any further, occurred in a few years when the consumer price index was only slightly above the reference level of the European Central Bank (ECB), 2%. Which raises another dilemma: if the index serves as a reference to ensure price stability. In fact, the Bank of Canada has chosen to adopt an underlying index "increased" which excludes prices of fruits, vegetables, gasoline, natural gas, rent of primary residence, intercity transport and snuff, to more reliably follow the evolution of prices.
In any case, the disparity between indices of retail prices and bubbles forming on certain assets will only difficult, even more, the work of central bankers and, in the future, the output of the stimulus policies. "We have to get used to this new world and is a complex situation. Because we can assist the absence of inflation at the retail level, which is what we have now, but asset bubbles occur, especially in the stock market. And it is an easy to handle for central banks because the economy is very weak, "says economist S & P.
That is, despite the weak economy, which would require a very loose monetary policy, the prices of certain assets can skyrocket and create a bubble that require action by the central bank, and that, as acknowledged by the IMF, is difficult solution. "The change in the relationship between growth and inflation throws monetary policy challenges for which there are no clear solutions". Even more. That scenario conceals an additional difficulty far greater consequences: the reduction of debt, the heavy burden of this crisis. "The main cost of deflation or falling prices is to increase the real value of debt," says Marta Noguer, of the Research of La Caixa, "the asset price tends to decrease, the guarantees of the loans shrink, pushing up wages and, ultimately, can boost the risk of unemployment, "says Noguer. That means that the current deleveraging process, and very painful for families and businesses, it becomes even more difficult. "In the forties, the process of diluting the weight of debt by increasing inflation went well and although now not an explicit goal, because it can not be, they help in the process of deleveraging," says Rosa Duce, chief economist at Deutsche Bank in Spain.
So says Jean Michel Six, "or the Federal Reserve or the Bank of Japan and the Bank of England want inflation to fall far beyond current levels, because it makes it very difficult to reduce the weight of the debt to GDP ".
Falling prices increase the real value of debt, public and private
Despite this interest-unmentionable in a public hearing-the "new normal" that begins to outline looks very different from the world in which we had been accustomed to live. "The stabilization [of the economy] does not mean a return to the previous average. Global growth may remain weak this year too, despite the expected acceleration, in the best case, is expected for the second half and will not be high enough to add pressure to inflation while maintaining the austerity prosecutor. There are many traits that actually target a "new normal", admitted Pioneer Investments analysts at a recent meeting in Munich.
This new reality means that in the future China will grow between 6.5% and 7%, not the 10% that had been recorded, India and Latin America growing less than they used to, United States growing around 2% or 2.5% and the euro area, no more than 1%. In this scenario, it is unlikely that there is pressure from raw materials and inflation remains low, but do not know at what levels. And that nuance matters.
What many forget is that after leaving the Great Depression of the early thirties, a few years later, between 1936 and 1937, the economies back into recession. Many of the factors that led to that relapse is a reality today, as alert Ilan Goldfajn of Itaú Unibanco, and the price falls are one of the indicators that remember that the battle is not over and the swords are still high. Hagan game.
The impact of the raw materials
Inflationary cycles are mainly marked by strong real economic activity and the evolution of the unemployment rate as well as interest rates in the long run, as you well said Marco Valli, chief eurozone economist at UniCredit, in his report? Surf Dilute debt through inflation? Not an option. But "the prices of raw materials have demonstrated inflationary impact, although our estimates suggest that it is a second-order impact tends to fade relatively quickly," he stresses.
However, some recent discoveries could anticipate structural changes in the energy market that could have a definite impact on prices. "It is too early to perceive, but what is happening in energy production with the discovery of shale gas (shale gas) and to a lesser extent, oil shale can have significant effects on the cost of energy "admits Marta Noguer, the study area of La Caixa. In any case, the decline in the price of raw materials has good share of responsibility for precipitating the downward trend in prices. "Oil demand is expected lower than expected and more gradual recovery is expected," said Noguer. Still, a barrel of Brent crude was trading at $ 102 at the market close last Friday. More incidence has for emerging moderation in food prices, particularly cereals, which are located far from the highs of 2011.
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