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Reforming the WTO is a Long and Complicated Process

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Since early autumn 2018, the issue of reforming the World Trade Organization (WTO) has become an increasingly visible item on the global economic agenda. It was one of the central questions posited in the final communique of the G20 Summit that took place in Buenos Aires on November 30 – December 1, and the parties intend to tackle it again at the next meeting in Tokyo.

The WTO is traditionally considered the third institution of the Bretton Woods system. However, while the first two – the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) – started functioning shortly after the end of World War II, it took 47 years of excruciating negotiations to create the third part, a universal trade organization. The establishment of the WTO in April 1994 following the Uruguay Round of negotiations (1986–1993) should rightly be considered the greatest event in economic relations in the 20th century. However, the tremendous success had a certain reverse side: contradictions and issues between member countries remained. This predetermined the future need to reform the WTO.

Trade Wars are a Signal for Action

The problem of the institutional reform of the WTO has been discussed at the level of experts for at least the last 15 years. However, it has never gone beyond the scope of an academic discussion, and for serious reasons too. The older generation of trade diplomats and experts remembers all too well the excruciating negotiations at the Uruguay Round, which were accompanied by crippling crises and contradictions between the parties. Hammering out compromises was a Herculean task, and the agreement on establishing the WTO crowned those compromises.

It is precisely because of these features of the WTO’s protracted birth that representatives of various countries, recognizing the need to reform the organization, were fully cognizant of how difficult and risky such a reform will be in practice. That is why each and every time discussions ended the same way: the GATT/WTO system has been functioning for 70 years, and even though it has its problems, no one can guarantee that a reform will not make things worse. Nowadays, the situation has been noticeably radicalized due to the new U.S. protectionist policies and the trade wars it started “with the entire world.”

The Administration of the 45th US President has embarked upon a course of open criticism and attacks on universal trade rules. In late February 2017, the United States Trade Representative (USTR) delivered the Trade Policy Agenda and Annual Report to Congress. The document emphasized that given the “unfair trade practices” of other countries, the United States can disregard the WTO rules and conduct a more “aggressive” trade policy in protecting its national interests.

On June 1, 2018, Washington imposed increased import tariffs on metals from the European Union, Canada and some other countries to 25 per cent for steel and 10 per cent for aluminium. The current U.S. administration believes that domestic steel production has fallen sharply in the recent years, and this threatens national security. However, Europe and Canada see the legal justification for Washington to increase tariffs as being completely unacceptable.

Partners Reject U.S. Protectionist Measures

Within the WTO, each country has its commitments based on the rules developed during the Uruguay Round. These rules allow import restrictions in three very specific situations: in cases of dumping; the use of illegal subsidies; and if there is a threat to national industries due to a sharp increase in imports. In each case, the damage from the above-stated actions of a supplier country must be substantiated. The damage is assessed in the course of an appropriate transparent investigation that involves all the parties. The current U.S. measures do not fit into any of these scenarios, and instead it is being justified by “reasons of national security.” This, however, gives the matter an entirely different legal twist.

The WTO legal framework does stipulate restricting market access for reasons of national security: appropriate measures are possible in cases of illegal trade in weapons and nuclear materials, the danger of armed conflicts, a terrorist threat, etc. Therefore, in such cases, every state itself determines the measures for restricting access to its market under Article XXI of GATT, which is devoted entirely to “reasons of national security.” The difficulty with applying Article XXI of GATT is that its application mechanism is still not quite specific; a state that introduces restrictions under this article acts as the ultimate judge in the dispute.

The United States offers a very subjective formulation of “reasons of national security” that is clearly detached from the current international rules. Washington sees a threat to national security in the sharp drop in domestic metal production, even though such a situation is essentially a consequence of regular international competition.

European countries and Canada were shocked by the fact that the United States imposes tariffs against them out of “reasons of national security.” As the President of the European Commission Jean-Claude Juncker emphasized, “these unilateral U.S. tariffs are unjustified and at odds with World Trade Organization rules. This is protectionism, pure and simple.” President of France Emmanuel Macron called the U.S. administration’s decision illegal and mistaken. Prime Minister of Canada Justin Trudeau spoke rather sharply at the June 2018 G7 Summit in Quebec calling Washington’s measures “punitive,” “unacceptable” and “insulting.”

Following repeated attempts to convince Washington that its protectionist measures were unfounded, in late November 2018, the European Union, along with China, Canada, Norway, Mexico, Russia and Turkey, and then India and Switzerland filed a complaint against the United States with the WTO’s Appellate Body concerning the illegality of the steel and aluminium tariffs imposed by the United States. In the complaint, the plaintiffs intend to challenge the U.S. tariffs as protective and simultaneously prove that the United States cannot invoke reasons of national security. This demarche against the United States by nine countries at once is a rather convincing proof that the WTO’s leading members are resisting Washington’s attempts to revise the existing rules of international trade.

Thus, the U.S. administration believes that it can protect its domestic market and ensure its foreign trade interests on the basis of its domestic trade legislation. Over the course of 2018, Washington primarily invoked two legislative acts. Under the Trade Act of 1974, the United States can impose penalty tariffs on countries that discriminate against American goods. The second is the 1962 Trade Expansion Act that allows the United States to restrict import of goods that would “threaten to impair the national security.” This act served as a legal justification for Washington to increase import tariffs on steel and aluminium starting June 1, 2018.

Europe, Canada and Japan believe that using legal acts that are over 50 years old is odd at the very least, since in the intervening decades, international economic regulations have changed drastically, the principal change being the emergence of a full-fledged multilateral regulation institution, i.e. the WTO, which was to a great degree promoted by the United States. Strictly speaking, the moment the WTO became operative in January 1995, the United States did not invoke the provisions of those domestic acts since it believed itself to be bound, like other WTO members, by the WTO’s commitments.

Every Side has its Arguments on Reforming the WTO

In March 2018, the United States Trade Representative Robert Lighthizer presented the latest version of the U.S. administration’s annual agenda in trade policies. The agenda concerns such issues as reforming the WTO, trade agreements with other countries and the application of U.S trade laws. The document is critical of the trade policies of previous administrations and simultaneously claims to reach a qualitatively new level in trade policies under the Trump administration.

Lighthizer’s report states that the U.S. administration is dissatisfied with the existing rules and their application in such areas as labour conditions, competition policies and the medical equipment market. It notes the investigations of U.S. officials into China’s violations of U.S. intellectual property rights. In essence, the report justifies instances of applying U.S. trade laws from the 1960s–1970s in order to protect national security interests, which cannot but cause concerns, since these laws are applied separately from the WTO rules and the commitments that the United States has undertaken as part of the organization.

As for the current multilateral negotiations at the Doha Round, Washington has specific grievances in that area, which may be considered justified to a certain extent. For instance, the United States is not satisfied with their highly stilted character, the impossibility of achieving new agreements other than at the biennial WTO ministerial conferences, and what the United States views as the outdated agenda of the Doha Round.

What is more, in recent years, the United States has not hidden its displeasure with the position of a large group of countries within the WTO which, having joined the organization as developing countries, continue to see themselves as such today, despite the fact that they have made significant progress in a number of economic sectors and even outstripped certain developed countries. In addition to this, many developing countries have non-transparent trade policies. Consequently, those WTO members de facto use privileges that Washington deems to be unjustified, which blocks progress in developing new WTO rules and also impedes further liberalization. This is the essence of Washington’s approach to reforming the WTO: eliminate unjustified and unfair privileges held by a group of developing countries that today essentially paralyse the multilateral trade system.

As for the other major player in international trade – the European Union – it has assumed a highly proactive stance on the issue of reforming the WTO. The European Union was the first to publish a list of specific proposals (a concept) on reforming the WTO. Analysing the entire list is rather a task for trade policy experts. It would therefore be appropriate to single out the key points. Even though the European Union’s stance was originally a direct consequence of the wrongfully protectionist measures of the United States towards European manufacturers, the document contains no direct or indirect complaints against Washington, which is largely reasonable, since reforming one of the key institutions of global economic management is too grave an issue to start it by settling scores with an old trade partner.

Essentially, Brussels shares Washington’s position on the matter, as well as its grievances against that group of developing countries that has reached a rather high level of economic development, but has no wish to part with their previously gained privileges

The EU proposals also note that today’s discussions are frequently dominated by the opinion that global trade rules somehow impede trade and, therefore, developing countries need to be exempted from both current and future rules. In fact, today, the differences between developed and many developing countries are not quite as pronounced as they were 25 years ago, when the WTO was established, meaning that the above-mentioned opinion is fundamentally wrong. Obviously, some flexibility in enforcing the compliance of developing countries with the WTO rules should be preserved, but only in those cases where it is necessary. The proposals put forward by Brussels contain specific mechanisms for tackling this task.

The EU concept focuses heavily on modernizing the WTO’s Appellate Body, a crucial organ in the mechanism of resolving disputes within the WTO. The European Union’s stance on the matter was supported in November by Canada, India, Norway, New Zealand, Switzerland, Australia, South Korea, Iceland, Singapore, Mexico and China.

In its proposals on the Appellate Body, Brussels largely takes Washington’s grievances against its current functioning into account. In particular, the European Union proposes limiting the appeals term to 90 days, which had been stipulated earlier, yet the parties often failed to comply with the requirement.

The EU concept also contains a series of initiatives on bolstering the multilateral trade system and improving the efficiency of the WTO.

China, which has been striving to form a united front with other countries that condemn Washington’s protectionism, has also called for a reform of the WTO.

While supporting WTO reform, China has thus far limited its actions to fairly general statements, stressing that the importance and inviolability of the WTO’s basic principles and rules. It would seem that Beijing is unlikely to be unconditionally receptive of Washington’s demands that current privileges for developing countries in the WTO be abolished. In contrast, China will rather put forward the need to fight protectionism, which is a threat to free trade.

As for Russia, it wholeheartedly supports the idea of reforming the WTO. President Vladimir Putin and Minister of Economic Development Maxim Oreshkin recently declared this stance. Russia’s trade diplomacy has quite good positions to take an active part in the process.

In conclusion, we need to emphasize that the nascent process of reforming of the WTO cannot be simple and quick, since the list of problems is too variegated. Above, we have outlined only some of these problems. At a certain stage, the most difficult problem will likely be that of transforming the decision-making system. The consensus mechanism that has been in effect in the GATT/WTO for over 70 years clearly hampers decision-making today, as the organization boasts 164 member countries. However, abolishing this mechanism will not be easy either. This is probably the main challenge to the incipient WTO reform.

First published in our partner RIAC

Professor of World Economy and International Affairs Department at Higher School of Economics, Leading Researcher at RAS Institute of World Economy and International Relations (IMEMO)

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Economy

2022: Small Medium Business & Economic Development Errors

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Calling Michelangelo: would Michelangelo erect a skyscraper or can an architect liberate David from a rock of marble? When visibly damaged are the global economies, already drowning their citizenry, how can their economic development departments in hands of those who never ever created a single SME or ran a business, expect anything else from them other than lingering economic agonies?

The day pandemic ends; immediately, on the next day, the panic on the center stage would be the struggling economies across the world.  On the small medium business economic fronts, despite, already accepted globally, as the largest tax contributor to any nation. Visible worldwide, already abandoned and ignored without any specific solutions, there is something strategically wrong with upskilling exporters and reskilling manufacturers or the building growth of small medium business economies. The SME sectors in most nations are in serious trouble but are their economic development rightly balanced?   

Matching Mindsets: Across the world, hard working citizens across the world pursue their goals and some end up with a job seeker mindset and some job creator mindset; both are good. Here is a globally proven fact; job seekers help build enterprises but job creators are the ones who create that enterprise in the first place. Study in your neighborhoods anywhere across the world and discover the difference.

Visible on LinkedIn: Today, on the SME economic development fronts of the world, clearly visible on their LinkedIn profiles, the related Ministries, mandated government departments, trade-groups, chambers, trade associations and export promotion agencies are primarily led by job seeker mindsets and academic or bureaucratic mentality. Check all this on LinkedIn profiles of economic development teams anywhere across the world.

Will jumbo-pilots do heart transplant, after all, economic performance depends on matching right competency; Needed today, post pandemic economic recovery demands skilled warriors with mastery of national mobilization to decipher SME creation and scalability of diversified SME verticals on digital platforms of upskilling for global age exportability. This fact has hindered any serious progress on such fronts during the last decade. The absence of any significant progress on digitization, national mobilization of entrepreneurialism and upskilling of exportability are clear proofs of a tragically one-sided mindset.

Is it a cruise holiday, or what? Today, the estimated numbers of all frontline economic development team members across 200 nations are roughly enough to fill the world-largest-cruise-ship Symphony that holds 6200 guests. If 99.9% of them are job-seeker mindsets, how can the global economic development fraternity sleep tonight? As many billion people already rely on their performances, some two billion in a critical economic crisis, plus one billion starving and fighting deep poverty. If this is what is holding grassroots prosperity for the last decade, when will be the best time to push the red panic button? 

The Big Fallacy of “Access to Finance” Notion: The goals of banking and every major institution on over-fanaticized notions of intricate banking, taxation are of little or no value as SME of the world are not primarily looking for “Access to Capital” they are rather seeking answers and dialogue with entrepreneurial job creator mindsets. SME management and economic development is not about fancy PDF studies of recycled data and extra rubber stamps to convince that lip service is working. No, it is not working right across the world.

SME are also not looking for government loans. They do not require expensive programs offered on Tax relief, as they make no profit, they do not require free financial audits, as they already know what their financial problems are and they also do that require mechanical surveys created by bureaucracies asking the wrong questions. This is the state of SME recovery and economic development outputs and lingering of sufferings.

SME development teams across the world now require mandatory direct SME ownership experiences

The New Hypothesis 2022: The new hypothesis challenges any program on the small medium business development fronts unless in the right hands and right mindsets they are only damaging the national economy. Upon satisfactory research and study, create right equilibrium and bring job seeker and job creator mindsets to collaborate for desired results. As a start 50-50, balances are good targets, however, anything less than 10% active participation of the job creator mindset at any frontline mandated SME Ministry, department, agency or trade groups automatically raises red flags and is deemed ineffective and irrelevant. 

The accidental economists: The hypothesis, further challenges, around the world, economic institutes of sorts, already, focused on past, present and future of local and global economy. Although brilliant in their own rights and great job seekers, they too lack the entrepreneurial job creator mindsets and have no experience of creating enterprises at large. Brilliantly tabulating data creating colorful illustrative charts, but seriously void of specific solutions, justifiably as their profession rejects speculations, however, such bodies never ready to bring such disruptive issues in fear of creating conflicts amongst their own job seeker fraternities. The March of Displaced cometh, the cries of the replaced by automation get louder, the anger of talented misplaced by wrong mindsets becomes visible. Act accordingly

The trail of silence: Academia will neither, as they know well their own myopic job seeker mindset. In a world where facial recognition used to select desired groups, pronouns to right gatherings, social media to isolate voting, but on economic survival fronts where, either print currency or buy riot gears or both, a new norm; unforgiveable is the treatment of small medium business economies and mishmash support of growth. Last century, laborious and procedural skills were precious, this century surrounded by extreme automation; mindsets are now very precious.  

Global-age of national mobilization: Start with a constructive open-minded collaborative narrative, demonstrate open courage to allow entrepreneurial points of views heard and critically analyze ideas on mobilization of small mid size business economies. Applying the same new hypotheses across all high potential contributors to SME growth, like national trade groups, associations and chambers as their frontline economic developers must also balance with the job creator mindset otherwise they too become irrelevant. Such ideas are not just criticism rather survival strategies. Across the world, this is a new revolution to arm SME with the right skills to become masters of trade and exports, something abandoned by their economic policies. To further discuss or debate at Cabinet Level explore how Expothon is making footprints on new SME thinking and tabling new deployment strategies. Expothon is also planning a global series of virtual events to uplift SME economies in dozens of selected nations.

Two wheels of the same cart: Silence on such matters is not a good sign. Address candidly; allow both mindsets to debate on how and why as the future becomes workless and how and why small medium business sectors can become the driving engine of new economic progress. Job seekers and job creators are two wheels of the same cart; right assembly will take us far on this economic growth passage. Face the new global age with new confidence. Let the nation witness leadership on mobilization of entrepreneurialism and see a tide of SME growth rise. The rest is easy.

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Rebalancing Act: China’s 2022 Outlook

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Authors: Ibrahim Chowdhury, Ekaterine T. Vashakmadze and Li Yusha

After a strong rebound last year, the world economy is entering a challenging 2022. The advanced economies have recovered rapidly thanks to big stimulus packages and rapid progress with vaccination, but many developing countries continue to struggle.

The spread of new variants amid large inequalities in vaccination rates, elevated food and commodity prices, volatile asset markets, the prospect of policy tightening in the United States and other advanced economies, and continued geopolitical tensions provide a challenging backdrop for developing countries, as the World Bank’s Global Economic Prospects report published today highlights.

The global context will also weigh on China’s outlook in 2022, by dampening export performance, a key growth driver last year. Following a strong 8 percent cyclical rebound in 2021, the World Bank expects growth in China to slow to 5.1 percent in 2022, closer to its potential — the sustainable growth rate of output at full capacity.

Indeed, growth in the second half of 2021 was below this level, and so our forecast assumes a modest amount of policy loosening. Although we expect momentum to pick up, our outlook is subject to domestic in addition to global downside risks. Renewed domestic COVID-19 outbreaks, including the new Omicron variant and other highly transmittable variants, could require more broad-based and longer-lasting restrictions, leading to larger disruptions in economic activity. A severe and prolonged downturn in the real estate sector could have significant economy-wide reverberations.

In the face of these headwinds, China’s policymakers should nonetheless keep a steady hand. Our latest China Economic Update argues that the old playbook of boosting domestic demand through investment-led stimulus will merely exacerbate risks in the real estate sector and reap increasingly lower returns as China’s stock of public infrastructure approaches its saturation point.

Instead, to achieve sustained growth, China needs to stick to the challenging path of rebalancing its economy along three dimensions: first, the shift from external demand to domestic demand and from investment and industry-led growth to greater reliance on consumption and services; second, a greater role for markets and the private sector in driving innovation and the allocation of capital and talent; and third, the transition from a high to a low-carbon economy.

None of these rebalancing acts are easy. However, as the China Economic Update points out, structural reforms could help reduce the trade-offs involved in transitioning to a new path of high-quality growth.

First, fiscal reforms could aim to create a more progressive tax system while boosting social safety nets and spending on health and education. This would help lower precautionary household savings and thereby support the rebalancing toward domestic consumption, while also reducing income inequality among households.

Second, following tightening anti-monopoly provisions aimed at digital platforms, and a range of restrictions imposed on online consumer services, the authorities could consider shifting their attention to remaining barriers to market competition more broadly to spur innovation and productivity growth.

A further opening-up of the protected services sector, for example, could improve access to high-quality services and support the rebalancing toward high-value service jobs (a special focus of the World Bank report). Eliminating remaining restrictions on labor mobility by abolishing the hukou, China’s system of household registration, for all urban areas would equally support the growth of vibrant service economies in China’s largest cities.

Third, the wider use of carbon pricing, for example, through an expansion of the scope and tightening of the emissions trading system rules, as well power sector reforms to encourage the penetration and nationwide trade and dispatch of renewables, would not only generate environmental benefits but also contribute to China’s economic transformation to a more sustainable and innovation-based growth model.

In addition, a more robust corporate and bank resolution framework would contribute to mitigating moral hazards, thereby reducing the trade-offs between monetary policy easing and financial risk management. Addressing distortions in the access to credit — reflected in persistent spreads between private and State borrowers — could support the shift to more innovation-driven, private sector-led growth.

Productivity growth in China during the past four decades of reform and opening-up has been private-sector led. The scope for future productivity gains through the diffusion of modern technologies and practices among smaller private companies remains large. Realizing these gains will require a level playing field with State-owned enterprises.

While the latter have played an instrumental role during the pandemic to stabilize employment, deliver key services and, in some cases, close local government budget gaps, their ability to drive the next phase of growth is questionable given lower profits and productivity growth rates in the past.

In 2022, the authorities will face a significantly more challenging policy environment. They will need to remain vigilant and ready to recalibrate financial and monetary policies to ensure the difficulties in the real estate sector don’t spill over into broader economic distress. Recent policy loosening suggests the policymakers are well aware of these risks.

However, in aiming to keep growth on a steady path close to potential, they will need to be similarly alert to the risk of accumulating ever greater levels of corporate and local government debt. The transition to high-quality growth will require economic rebalancing toward consumption, services, and green investments. If the past is any guide to the future, the reliance on markets and private sector initiative is China’s best bet to achieve the required structural change swiftly and at minimum cost.

First published on China Daily, via World Bank

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The US Economic Uncertainty: Bitcoin Faces a Test of Resilience?

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Is inflation harmful? Is inflation here to stay? And are people really at a loss? These and countless other questions along the same lines dominated the first half of 2021. Many looked for alternative investments in the national bourse, while others adopted unorthodox streams. Yes, I’m talking about bitcoin. The crypto giant hit records after records since the pandemic made us question the fundamentals of our conventional economic policies. And while inflation was never far behind in registering its own mark in history, the volatility in the crypto stream was hard to deny: swiping billions of dollars in mere days in April 2021. The surge came again, however. And it will keep on coming; I have no doubt. But whether it is the end of the pandemic or the early hues of a new shade, the tumultuous relationship between traditional economic metrics and the championed cryptocurrency is about to get more interesting.

The job market is at the most confusing crossroads in recent times. The hiring rate in the US has slowed down in the past two months, with employers adding only 199,000 jobs in December. The numbers reveal that this is the second month of depressing job additions compared to an average of more than 500,000 jobs added each month throughout 2021. More concerning is that economists had predicted an estimated 400,000 jobs additions last month. Nonetheless, according to the US Bureau of Labour Statistics, the unemployment rate has ticked down to 3.9% – the first time since the pre-pandemic level of 3.5% reported in February 2020. Analytically speaking, US employment has returned to pre-pandemic levels, yet businesses are still looking for more employees. The leverage, therefore, lies with the labor: reportedly (on average) every two employees have three positions available.

The ‘Great Resignation,’ a coinage for the new phenomenon, underscores this unique leverage of job selection. Sectors with low-wage positions like retail and hospitality face a labor shortage as people are better-positioned to bargain for higher wages. Thus, while wages are rising, quitting rates are record high simultaneously. According to recent job reports, an estimated 4.5 million workers quit their jobs in November alone. Given that this data got collected before the surge of the Omicron variant, the picture is about to worsen.

While wages are rising, employment is no longer in the dumps. People are quitting but not to invest stimulus cheques. Instead, they are resigning to negotiate better-paying jobs: forcing the businesses to hike prices and fueling inflation. Thus, despite high earnings, the budget for consumption [represented by the Consumer Price Index (CPI)] is rising at a rate of 6.8% (reported in November 2021). Naturally, bitcoin investment is not likely to bloom at levels rivaling the last two years. However, a downfall is imminent if inflation persists.

The US Federal Reserve sweats caution about searing gains in prices and soaring wage figures. And it appears that the fed is weighing its options to wind up its asset purchase program and hike interest rates. In March 2020, the fed started buying $40 billion worth of Mortgage-backed securities and $80 billion worth of government bonds (T-bills). However, a 19% increase in average house prices and a four-decade-high level of inflation is more than they bargained. Thus, the fed officials have been rooting for an expedited normalization of the monetary policy: further bolstered by the job reports indicating falling unemployment and rising wages. In recent months, the fed purview has dramatically shifted from its dovish sentiments: expecting no rate hike till 2023 to taper talks alongside three rate hikes in 2022.

Bitcoin now faces a volatile passage in the forthcoming months. While the disappointing job data and Omicron concerns could nudge the ball in its favor, the chances are that a depressive phase is yet to ensue. According to crypto-analysts, the bitcoin is technically oversold i.e. mostly devoid of impulsive investors and dominated by long-term holders. Since November, the bitcoin has dropped from the record high of $69,000 by almost 40%: moving in the $40,000-$41,000 range. Analysts believe that since bitcoin acts as a proxy for liquidity, any liquidity shortage could push the market into a mass sellout. Mr. Alex Krüger, the founder of Aike Capital, a New York-based asset management firm, stated: “Crypto assets are at the furthest end of the risk curve.” He further added: “[Therefore] since they had benefited from the Fed’s “extraordinarily lax monetary policy,” it should suffice to say that they would [also] suffer as an “unexpectedly tighter” policy shifts money into safer asset classes.” In simpler terms, a loose monetary policy and a deluge of stimulus payments cushioned the meteoric rise in bitcoin valuation as a hedge against inflation. That mechanism would also plummet the market with a sudden hawkish shift.

The situation is dire for most industries. Job participation levels are still low as workers are on the sidelines either because of the Omicron concern or lack of child support. In case of a rate hike, businesses would be forced to push against the wages to accommodate affordability in consumer prices. For bitcoin, the investment would stay dormant. However, any inflationary surprises could bring about an early tightening of the policy: spelling doom for the crypto market. The market now expects the job data to worsen while inflation to rise at 7.1% through December in the US inflation data (to be reported on Wednesday). Any higher than the forecasted figure alongside uncertainty imbued by the new variant could spark a downward spiral in bitcoin – probably pushing the asset below the $25000 mark.

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