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Economics

Emerging Economies Must Prepare for Fed Policy Tightening

Policymakers may need to react by pulling multiple policy levers, depending on Fed actions and their own challenges at home.

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By Stephan Danninger, Kenneth Kang and Hélène Poirson

Policymakers may need to react by pulling multiple policy levers, depending on Fed actions and their own challenges at home.

For most of last year, investors priced in a temporary rise in inflation in the United States given the unsteady economic recovery and a slow unravelling of supply bottlenecks.

Now sentiment has shifted. Prices are rising at the fastest pace in almost four decades and the tight labor market has started to feed into wage increases. The new Omicron variant has raised additional concerns of supply-side pressures on inflation. The Federal Reserve referred to inflation developments as a key factor in its decision last month to accelerate the tapering of asset purchases.

These changes have made the outlook for emerging markets more uncertain. These countries also are confronting elevated inflation and substantially higher public debt. Average gross government debt in emerging markets is up by almost 10 percentage points since 2019 reaching an estimated 64 percent of GDP by end 2021, with large variations across countries. But, in contrast to the United States, their economic recovery and labor markets are less robust. While dollar borrowing costs remain low for many, concerns about domestic inflation and stable foreign funding led several emerging markets last year, including Brazil, Russia, and South Africa, to start raising interest rates.

New risks to recovery

We continue to expect robust US growth. Inflation will likely moderate later this year as supply disruptions ease and fiscal contraction weighs on demand. The Fed’s policy guidance that it would raise borrowing costs more quickly did not cause a substantial market reassessment of the economic outlook. Should policy rates rise and inflation moderate as expected, history shows that the effects for emerging markets are likely benign if tightening is gradual, well telegraphed, and in response to a strengthening recovery. Emerging-market currencies may still depreciate, but foreign demand would offset the impact from rising financing costs.

Even so, spillovers to emerging markets could also be less benign. Broad-based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation. Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally. These developments could come with a slowing of US demand and trade and may lead to capital outflows and currency depreciation in emerging markets.

The impact of Fed tightening in a scenario like that could be more severe for vulnerable countries. In recent months, emerging markets with high public and private debt, foreign exchange exposures, and lower current-account balances saw already larger movements of their currencies relative to the US dollar. The combination of slower growth and elevated vulnerabilities could create adverse feedback loops for such economies, as the IMF highlighted in its October releases of the World Economic Outlook and Global Financial Stability Report.

Difficult tradeoffs

Some emerging markets have already started to adjust monetary policy and are preparing to scale back fiscal support to address rising debt and inflation. In response to tighter funding conditions, emerging markets should tailor their response based on their circumstances and vulnerabilities. Those with policy credibility on containing inflation can tighten monetary policy more gradually, while others with stronger inflation pressures or weaker institutions must act swiftly and comprehensively. In either case, responses should include letting currencies depreciate and raising benchmark interest rates. If faced with disorderly conditions in foreign exchange markets, central banks with sufficient reserves can intervene provided this intervention does not substitute for warranted macroeconomic adjustment.

Nevertheless, such actions can pose difficult choices for emerging markets as they trade off supporting a weak domestic economy with safeguarding price and external stability. Similarly, extending support to businesses beyond existing measures may increase credit risks and weaken the longer-term health of financial institutions by delaying the recognition of losses. And rolling back those measures could further tighten financial conditions, weakening the recovery.

To manage these tradeoffs, emerging markets can take steps now to strengthen policy frameworks and reduce vulnerabilities. For central banks tightening to contain inflation pressures, clear and consistent communication of policy plans can enhance the public’s understanding of the need to pursue price stability. Countries with high levels of debt denominated in foreign currencies should look to reduce those mismatches and hedge their exposures where feasible. And to reduce rollover risks, the maturity of obligations should be extended even if it increases costs. Heavily indebted countries may also need to start fiscal adjustment sooner and faster.

Continued financial policy support for businesses should be reviewed, and plans to normalize such support should be calibrated carefully to the outlook and to preserve financial stability. For countries where corporate debt and bad loans were high even before the pandemic, some weaker banks and nonbank lenders may face solvency concerns if financing becomes difficult. Resolution regimes should be readied.

Commitments and confidence

Beyond these immediate measures, fiscal policy can help build resilience to shocks. Setting a credible commitment to a medium-term fiscal strategy would help boost investor confidence and regain room for fiscal support in a downturn. Such a strategy could include announcing a comprehensive plan to gradually increase tax revenues, improve spending efficiency, or implement structural fiscal reforms such as pension and subsidy overhauls (as described in the IMF’s October Fiscal Monitor).

Finally, despite the expected economic recovery, some countries may need to rely on the global financial safety net. That may include using swap lines, regional financing arrangements, and multilateral resources. The IMF has contributed with last year’s $650 billion allocation of Special Drawing Rights, the most ever.

While such resources boost buffers against potential economic downturns, past episodes have shown that some countries may need additional financial breathing room. That’s why the IMF has adapted its financial lending toolkit for member nations. Countries with strong policies can tap precautionary credit lines to help prevent crises. Others can access lending tailored to their income level, though programs must be anchored by sustainable policies that restore economic stability and foster sustainable growth.

While the global recovery is projected to continue this year and next, risks to growth remain elevated by the stubbornly resurgent pandemic. Given the risk that this could coincide with faster Fed tightening, emerging economies should prepare for potential bouts of economic turbulence.

 

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Peppercomm Named Public Relations Agency of Record for AgriFORCE

Peppercomm Named Public Relations Agency of Record for AgriFORCE
PR Newswire
NEW YORK, Aug. 18, 2022

AgTech innovator taps integrated communications and marketing agency to drive global growth and brand awareness
NEW YORK, Aug. 18, 2022 /PRNewswire…

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Peppercomm Named Public Relations Agency of Record for AgriFORCE

PR Newswire

AgTech innovator taps integrated communications and marketing agency to drive global growth and brand awareness

NEW YORK, Aug. 18, 2022 /PRNewswire/ -- Peppercomm, award-winning, strategic and integrated communications and marketing agency, today announced it has been named global PR agency of record for AgriFORCE Growing Systems Ltd. (NASDAQ: AGRI; AGRIW), an AgTech company dedicated to advancing sustainable cultivation and crop processing to yield more nutritious food with limited environmental impact. AgriFORCE selected Peppercomm following a competitive evaluation of several firms.

Headquartered in Vancouver, British Columbia, AgriFORCE is poised to disrupt the agriculture industry by building a portfolio of proprietary AgTech solutions to help growers achieve higher quality and more sustainably produced crops, alongside branded products and ingredients that unlock superior nutrition for consumers. With an agreement to acquire Delphy Group BV and a binding LOI to acquire Deroose Plants NV recently announced, the company's strategic and holistic approach aims to address key challenges facing the agriculture industry.

"We're pleased to work with a company that can have a real impact on our food and our planet," said Steve Cody, CEO of Peppercomm. "The global pandemic and Russian invasion of Ukraine have significantly affected the food supply chain and accelerated the need for solutions to address these extraordinary challenges. AgriFORCE's IP and expertise are coming to the marketplace at just the right time."

Peppercomm will help AgriFORCE build global brand awareness through an integrated approach that includes strategic counsel, messaging development, thought leadership, earned media and social media, and digital advertising. 

"AgriFORCE is excited to partner with Peppercomm as our agency of record," shared Mauro Pennella, President of AgriFORCE Brands and CMO of AgriFORCE Growing Systems. "Peppercomm has strong experience across agriculture, agtech, and consumer brands, including public companies with multinational operations. We are confident that their tight-knit and senior team, with existing industry and media relationships, can bring to life the vision and purpose of AgriFORCE in the months ahead."

About Peppercomm
Peppercomm is an award-winning strategic, integrated communications and marketing agency headquartered in New York City with offices in San Francisco and London. The firm, which was recently acquired by Ruder Finn, combines 27 award-winning years of expertise serving blue chip and breakout clients with forward-thinking new service offerings and the freshness of a start-up. This unique mix of experience and energy enables the firm to attract and empower teams with a creative edge, drive, and passion for promoting, protecting, and connecting clients in a fast-changing marketplace. Founded in 1995, Peppercomm has received numerous accolades, including Crain's Best Places to Work in NYC 2021, PRWeek's Best Places to Work 2020, the Agency Elite 100, SABRE Award (Integrated Campaign), PRSA Big Apple (2020, 2019 Winner Integrated Campaign), Platinum PR Awards (Media Relations), PRNews Digital Awards (CSR), the Bulldog PR Awards (Media Relations) and PR Daily's Top Agencies of 2022 among others. For more information visit peppercomm.com.

About AgriFORCE
AgriFORCE Growing Systems Ltd. (NASDAQ: AGRI; AGRIW) is an AgTech company focused on the development and acquisition of crop production know-how and intellectual property augmented by advanced AgTech facilities and solutions. Looking to serve the global market, the Company's current focus is on North America, Europe, and Asia. The AgriFORCE vision is to be a leader in delivering plant-based foods and products through advanced and sustainable AgTech solution platforms that make positive change in the world—from seed to table. The AgriFORCE goal: Clean. Green. Better. Additional information about AgriFORCE is available at: agriforcegs.com.

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NEARLY HALF OF AMERICANS FEEL THEY CAN’T AFFORD THEIR FORMER LIFESTYLE; THREE-FOURTHS ARE SHIFTING GROCERY PURCHASING BEHAVIORS, FINDS NCSOLUTIONS

NEARLY HALF OF AMERICANS FEEL THEY CAN’T AFFORD THEIR FORMER LIFESTYLE; THREE-FOURTHS ARE SHIFTING GROCERY PURCHASING BEHAVIORS, FINDS NCSOLUTIONS
PR Newswire
NEW YORK, Aug. 18, 2022

66% of consumers are more mindful of spending on groceries85% of …

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NEARLY HALF OF AMERICANS FEEL THEY CAN'T AFFORD THEIR FORMER LIFESTYLE; THREE-FOURTHS ARE SHIFTING GROCERY PURCHASING BEHAVIORS, FINDS NCSOLUTIONS

PR Newswire

  • 66% of consumers are more mindful of spending on groceries
  • 85% of Americans are concerned or very concerned about inflation
  • 58%  believe the cost of living will be more expensive in the coming year
  • 46% of consumers say they're buying fewer non-essentials
  • 43% seek out sales and promotions to afford their favorite brands 

NEW YORK, Aug. 18, 2022 /PRNewswire/ -- Nearly half of Americans (45%) feel like they can't afford their previous lifestyle and 76% of American consumers say their family has changed how they buy food with prices on the rise. In addition, two-thirds (66%) are more mindful of how they are spending their money. These findings are part of a new consumer sentiment survey on inflation commissioned by NCSolutions (NCS), the leading company for improving advertising effectiveness.

Eighty-five percent of Americans are very concerned or extremely concerned about inflation and almost unanimously (93%) they said we're in an inflationary time. On the same economic theme, over half (57%) are concerned about the country's financial situation, while 47% say they're concerned about their family's financial situation. Eight out of 10 or 83% of Americans expect the cost of living will become somewhat more or much more expensive in the coming year. Sixty-five percent of Americans agree with the statement 'my income has not increased as fast at the cost of food, beverage and personal care products.'

"For the second time in a little over two years, consumers are pivoting to new purchasing behaviors at the grocery store," commented Alan Miles, CEO, NCSolutions. "Since the start of the pandemic, they've been swapping their favorite brands for what's available. Today, though, value is the centerpiece more often than availability, consumers are selecting brands and products to stretch their budgets as far as possible. CPG brands that meet customers where they are both in this inflationary moment and as prices ease have the best shot at keeping them for the long-term."

SIX YEARS OF PRICE TRENDS
NCSolutions' proprietary purchase data, which reflects the buying trends of consumers for CPG products, shows an almost 13% price increase on average. In a six-year price trend analysis, we see that price increases in 2022 are pacing at an accelerated rate compared to other years.  The survey findings bear this out with 58% of consumers believing the cost of living will be much more expensive in the coming year and 71% feeling the U.S. economy is declining. 

Six-year Inflation Trend

 

Percentage Inflation Change Year-Over-Year

On a consumer packaged goods category level, there are wide variations in percentage increases.

CONSUMERS REACT TO THE PINCH
Compared to one year ago, six in 10 Americans believe CPG product packaging has gotten smaller but costs the same. Consumers still feel the strain of supply chain issues as 69% say there are fewer items of the same product on the shelves. Thirty-six percent of Americans said there is less variety of  brands available on the shelf today compared with one year ago.

Over half (53%) of American consumers say they find basic food staples more expensive; 40% believe a recession will occur in 2023. For almost half of consumers (46%), this means buying fewer non-essential items on the food aisle, or for 43%, it means buying only the essentials.  Seventy-one percent of Americans say the increased price of groceries is straining their savings. For other American consumers, increased prices on the grocery aisle mean seeking out less expensive brands (45%).  Other ways consumers are coping with the increased price of groceries are loading up the pantry (27%) or freezer (26%) or shopping closer to home (24%).

When it comes to consumers' preferred brands, they have to make tough choices. Sixty percent of consumers seek less expensive alternatives when their favorite brands reach a price beyond their budget. Forty-six percent of consumers plan to go without their favorite brands, and 43% of consumers look for sales to offset the cost. In the survey, respondents could select multiple ways they react.

June 2021 vs. June 2022: Inflation Increases by category

"Though it may be tempting to pull back on advertising, a more effective strategy is to recognize and respond to consumer 'stress-flation.' Brands have an opportunity now to build loyalty and attract new customers with empathetic marketing," said Leslie Wood, Chief Research Officer, NCSolutions. "We're heading into a period of heavy CPG purchasing moments, such as back to school and the approaching holidays. Compelling, well-targeted advertising is a proven strategy for increasing brand equity and sales both in the short- and long-term."

CONSUMER PRIORITIES
Respondents were asked, "When shopping for groceries, which products are most important." The majority ranked:

  1. Affordable products that provide a clear value for my money 
  2. Finding food products that feed their families for several meals
  3. Products they know their families will enjoy eating

ABOUT THE CONSUMER SURVEY: The online survey of 2,141 respondents was fielded from June 17- 20, 2022.  Responses presented in this survey were weighted by location, education, income and other demographics to be representative of the overall population. To read more about the findings, you can download the full report

ABOUT NCS
NCSolutions makes advertising work better. Our unrivaled data resources powered by leading providers combine with scientific rigor and leading-edge technology to empower the CPG ecosystem to create and deliver more effective advertising. With NCS's proven approach, brands achieve continuous optimization everywhere ads appear through purchase-based audience targeting and sales measurement solutions that have impacted billions in media spend for our customers. NCS is a joint venture company with  Nielsen as the majority owner. 

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SOURCE NCSolutions

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Economics

Legal Services Sourcing and Procurement Market by 2025| COVID-19 Impact & Recovery Analysis | SpendEdge

Legal Services Sourcing and Procurement Market by 2025| COVID-19 Impact & Recovery Analysis | SpendEdge
PR Newswire
NEW YORK, Aug. 18, 2022

NEW YORK, Aug. 18, 2022 /PRNewswire/ — The “Legal Services Market” report has been added to SpendEdge’s…

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Legal Services Sourcing and Procurement Market by 2025| COVID-19 Impact & Recovery Analysis | SpendEdge

PR Newswire

NEW YORK, Aug. 18, 2022 /PRNewswire/ -- The "Legal Services Market" report has been added to SpendEdge's library which is trusted by more than 100 CPOs and 500 category managers who use our insights daily.

The Legal Services market is poised to grow by USD 187.38 Billion, progressing at a CAGR of almost 3.64% during the forecast period

https://spendedge.com/sample-report/process-instrumentation-sourcing-and-procurement-intelligence-report

Key Highlights Offered in the Report:

  • Information on how to identify strategic and tactical negotiation levels that will help achieve the best prices.
  • Gain information on relevant pricing levels, and a detailed explanation of the pros and cons of prevalent pricing models.
  • Methods to help engage with the right suppliers and discover KPIs to evaluate incumbent suppliers.

Fetch actionable market insights on the post-COVID-19 impact on each product and service segment.

Some of the Top Legal Services suppliers listed in this report:

This Legal Services procurement intelligence report has enlisted the top suppliers and their cost structures, SLA terms, best selection criteria, and negotiation strategies.

  • Latham and Watkins
  • Allen and Overy
  • Hogan Lovells

Fetch actionable market insights on the post-COVID-19 impact on each product and service segment:

https://spendedge.com/sample-report/process-instrumentation-sourcing-and-procurement-intelligence-report

Top Selling Report:

  1. Asset Recovery Services - Forecast and AnalysisThe asset recovery services will grow at a CAGR of 9.49% during 2021-2025. Asia Asset Recovery Pte Ltd., TES-Amm Singapore Pte Ltd., and Iron Mountain Inc. are among the prominent suppliers in the asset recovery services market. Click the above link to download the free sample of this report.
  2. Vulnerability Management Sourcing and Procurement ReportVulnerability Management Procurement Market, prices will increase by 4%-6% during the forecast period and suppliers will have moderate bargaining power in this market. Click the above link to download the free sample of this report.
  3. Business Process Outsourcing Services- Sourcing and Procurement Intelligence ReportThis report offers key advisory and intelligence to help buyers identify and shortlist the most suitable suppliers for their Legal Services. Click the above link to download the free sample of this report.

To access the definite purchasing guide on the Legal Services that answers all your key questions on price trends and analysis:

  • Am I paying/getting the right prices? Is my Legal Services TCO (total cost of ownership) favorable?
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  • Which pricing models offer the most rewarding opportunities?

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Table of Content

  • Executive Summary
  • Market Insights
  • Category Pricing Insights
  • Cost-saving Opportunities
  • Best Practices
  • Category Ecosystem
  • Category Management Strategy
  • Category Management Enablers
  • Suppliers Selection
  • Suppliers under Coverage
  • US Market Insights
  • Category scope
  • Appendix

About SpendEdge:

SpendEdge shares your passion for driving sourcing and procurement excellence. We are the preferred procurement market intelligence partner for 120+ Fortune 500 firms and other leading companies across numerous industries. Our strength lies in delivering robust, real-time procurement market intelligence reports and solutions.

Contacts:

SpendEdge
Anirban Choudhury
Marketing Manager
Ph No:
+1 (872) 206-9340
https://www.spendedge.com/contact-us

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SOURCE SpendEdge

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