Global economy

The UK has spent years fretting about its dismal productivity performance in the wake of the financial crisis, but it’s no closer to figuring out what has gone wrong or what (if anything) should be done about it.

Perhaps it should look further afield. The UK is not the only place with a “productivity puzzle” on its hands: New Zealand is scratching its head too. For a developed country with seemingly supportive policies on tax, regulation and education, New Zealand’s workers are surprisingly unproductive, and they don’t seem to be improving very quickly either. Read more

By Roman Olearchyk and Lindsay Whipp

Ukraine’s economy and Kiev’s financial position were deteriorating rapidly even before the political crisis gripped the country last year. But as the interim government grapples with Russia’s annexation of Crimea, spreading separatist unrest in the east and gas bills that will almost double, Kiev is slipping closer towards financial breaking point. The government is awaiting a multibillion dollar loan International Monetary Fund and on Monday night the central bank raised key interest rates as it embarks on reform of the way it conducts its monetary policy. Read more

Robin Harding

An independent review of the IMF’s economic forecasts out today basically gives the Fund a clean bill of health, but finds that when making big lending programmes, its initial forecasts tend to be optimistic on growth and pessimistic on budget deficits. Read more

By Eswar Prasad, Karim Foda, and Arnav Sahu

The latest update of the Brookings-FT Tiger index shows that the global economic recovery is back on track, although it remains slow and unsteady. The recovery is being borne along by surging business and consumer confidence in advanced economies, and stabilisation in the growth of emerging markets. However, it may be premature for policymakers to declare victory as the recovery is still tenuous and just a shock or two away from turning into another slump.

Advanced economies seem to have put the worst behind them. The US economy continues to push forward at a modest pace and the UK is experiencing surprisingly good growth, while the core eurozone economies and Japan are also turning in positive growth. Across the board, private sector confidence has improved in these economies and inflation remains subdued. However, labour market performance continues to be weak and financial conditions are still mixed. The postponement of the US Federal Reserve’s tapering of its quantitative easing policies sparked a rally in equity markets but credit growth has not picked up in most advanced economies, still acting as a drag on the recovery. Read more