This month’s Global Talent Update reports on cooling inflation in the euro zone; the likelihood that developing economies in East Asia and the Pacific will see slower growth ahead; the fight against hackers in Costa Rica, and the burgeoning workforce in Africa.
Annual inflation in the euro zone cooled to its lowest level since October 2021, falling to 4.3% in September. That was down from a 5.2% annual reading in August, while month-on-month inflation dipped from 0.5% to 0.3%. Core inflation — which excludes energy, food, alcohol and tobacco, and is closely watched by monetary policymakers — dropped to 4.5% year on year in September from 5.3% in August.
This comes after the European Central Bank decided to hike interest rates to a record level in September, pegging its key rate at 4%. The move was described as a “dovish hike” after the ECB also gave its strongest suggestion yet that its governing council feels rates may be at sufficiently high levels to bring inflation to target in the medium term.
The bank’s most recent macroeconomic projections for the euro area anticipate inflation will average 5.6% this year, falling to 3.2% in 2024 and 2.1% in 2025. Officials have tried to dampen expectations for rate cuts on the horizon, with French central bank Governor Francois Villeroy de Galhau saying that it would be “premature” to bet on when the first cut will come.
Developing economies in East Asia and the Pacific are set to see slower growth this year and next as the region reels from the impact of tighter finances and a weak global environment, according to the World Bank’s latest report.
Gross domestic product growth is estimated at 5 percent in 2023 and 4.5 percent in 2024, the World Bank said in its semi-annual outlook for East Asia and the Pacific. That compares with April forecasts of 5.1 percent for this year and 4.8 percent for the next. The latest estimates were still faster than the pace seen in other emerging markets, it said.
China accounts for some of that drag. The world’s second-largest economy will likely expand 4.4 percent next year, down from the 4.8 percent previously projected, amid property woes, increasing debt, and a fading boost from the post-Covid reopening. The 2023 GDP forecast for China was kept at 5.1 percent.
Excluding China, East Asia and the Pacific should see slightly faster growth in 2024 as the global economy improves and revives foreign demand for the region’s manufactured goods and commodities, the World Bank said. Geopolitical tensions, possible natural disasters including extreme weather events are downside risks to the outlook, it said.
The future of how countries work together to fight hackers is taking shape in a small Central American country that until recently was rarely mentioned in cybersecurity conversations: Costa Rica. A year and a half after Russian cyber criminals nearly paralyzed the Costa Rican government, Costa Rica is establishing itself as a regional leader in cybersecurity, hardening its systems to prevent a repeat of last year’s digital disaster, and building a new security operations center to streamline its response to future cyber crises.
Costa Rica could be just the first of several countries to host a cyber hub that helps defend an entire region from digital attacks. If its nascent project is successful, it could become the template for a network of facilities that boost the cybersecurity of struggling countries.
Costa Rica’s rise to prominence in cybersecurity began in April 2022, when a Russian cybercrime gang known as Conti launched a massive ransomware attack on Costa Rican government agencies, crippling everything from customs and tax collection systems to transportation and electricity infrastructure. The attacks — which one analyst called “possibly the most significant ransomware attack to date” — began shortly before the inauguration of the country’s new president, Rodrigo Chaves, who had been one of the first prominent Latin American politicians to criticize Russia’s invasion of Ukraine.
As established economies fret about labour shortages, Africa will soon be home to the world’s largest working age population and a burgeoning consumer class. It is also rich in the natural resources needed to help the world transition to net zero. Yet despite such bounty, according to a report in September from the World Economic Forum, the continent’s economy has slowed over the past decade.
A structural economic shift has occurred as people have left work in the fields for more productive jobs in trade and other services in cities. Employment in services increased from 30% to 39% from 2000 to 2019, securing the service sector’s place as the major driver of economic output across the continent. Productivity in the sector has fallen, however, but the industrial sector, spanning manufacturing, construction, and utilities, offers opportunities to raise productivity.
At a time when multinational companies are working to diversify supply chains, African companies and industries have opportunities to gain a greater role as suppliers, particularly if they work to add value to products with export potential.