The world this week - Business
The World Bank slashed its forecast of global GDP growth this year, to 2.9%.
It warned that the risk of stagflation was considerable and that the world should prepare for “several years of above-average inflation and below-average growth”.
Real income per person in 2023 is expected to remain below pre-pandemic levels in 40% of developing economies.
The OECD also cut its forecast for growth, but played down the risk of stagflation; it expects inflation to start easing later this year.
Appearing before a Senate committee, Janet Yellen acknowledged that America’s high level of inflation was “unacceptable”, and asked Congress to “mitigate” rising household costs through a variety of measures, such as lowering prescription-drug prices.
The American treasury secretary earlier denied claims in a new book that she had told Joe Biden to reduce the size of his $1.9trn stimulus package last year because it would stoke inflation.
Target issued a profit warning because of a build-up in its inventory, which it will clear by heavily discounting prices on a range of goods.
Like other retailers, the department-store chain is adapting to a change in consumer spending towards household essentials, such as food and fuel, and away from frivolous products.
In Britain retail sales fell at an annual rate of 1.1% in May, the biggest drop since January 2021, when the country was in lockdown.
The four-day Platinum Jubilee weekend provided a small fillip.
Retail footfall was up by 6.9% versus the average for May.
Spending in pubs rose by 74%, year on year.
The Turkish lira fell sharply again, after Recep Tayyip Erdogan, Turkey’s president, reiterated his pledge to continue cutting interest rates, despite annual inflation running at 73.5%.
Mr Erdogan has pressed the nominally independent central bank to reduce rates, which he hopes will boost growth.
But the weak lira is pushing up the cost of imports, especially for food and energy.
Mr Erdogan has called interest rates “the mother of evils”.
This week he said only “those living a charmed existence” benefit from them.
Australia’s central bank made a more assertive push to tame inflation by raising its main interest rate by half a percentage point, to 0.85%.
That follows a similar increase in May.
India’s central bank also lifted its benchmark rate by half a point, to 4.9%, the biggest rise in over a decade.