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OPINION

The Stagflation Threat Is Real

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There is a growing consensus that the US economy’s inflationary pressures and growth challenges are attributable largely to temporary supply bottlenecks that will be alleviated in due course. But there are plenty of reasons to think the optimists will be disappointed. Writes NOURIEL ROUBINI

I have been warning for several months that the current mix of persistently loose monetary, credit, and fiscal policies will excessively stimulate aggregate demand and lead to inflationary overheating. Compounding the problem, medium-term negative supply shocks will reduce potential growth and increase production costs. Combined, these demand and supply dynamics could lead to 1970s-style stagflation (rising inflation amid a recession) and eventually even to a severe debt crisis.

  “mild” stagflation is already underway. Inflation is rising in the United States and many advanced economies, and growth is slowing sharply, despite massive monetary, credit, and fiscal stimulus.

There is now a consensus that the growth slowdown in the US, China, Europe, and other major economies is the result of supply bottlenecks in labor and goods markets. The optimistic spin from Wall Street analysts and policymakers is that this mild stagflation will be temporary, lasting only as long as the supply bottlenecks do.

In fact, there are multiple factors behind this summer’s mini-stagflation. For starters, the Delta variant is temporarily boosting production costs, reducing output growth, and constraining labor supply. Workers, many of whom are still receiving the enhanced unemployment benefits that will expire in September, are reluctant to return to the workplace, especially now that Delta is raging. And those with children may need to stay at home, owing to school closures and the lack of affordable childcare.1

On the production side, Delta is disrupting the reopening of many service sectors and throwing a monkey wrench into global supply chains, ports, and logistics systems. Shortages of key inputs such as semiconductors are further hampering production of cars, electronic goods, and other consumer durables, thus boosting inflation.

Still, the optimists insist that this is all temporary. Once Delta fades and benefits expire, workers will return to the labor market, production bottlenecks will be resolved, output growth will accelerate, and core inflation – now running close to 4% in the US – will fall back toward the US Federal Reserve’s 2% target by next year.

On the demand side, meanwhile, it is assumed that the US Federal Reserve and other central banks will start to unwind their unconventional monetary policies. Combined with some fiscal drag next year (when deficits may be lower), this supposedly will reduce the risks of overheating and keep inflation at bay. Today’s mild stagflation will then give way to a happy goldilocks outcome – stronger growth and lower inflation – by next year.

But what if this optimistic view is incorrect, and the stagflationary pressure persists beyond this year? It is worth noting that various measures of inflation are not just well above target but also increasingly persistent. For example, in the US, core inflation, which strips out volatile food and energy prices, is likely still to be near 4% by year’s end. Macro policies, too, are likely to remain loose, judging by the Biden administration’s stimulus plans and the likelihood that weak eurozone economies will run large fiscal deficits even in 2022. And the European Central Bank and many other advanced-economy central banks remain fully committed to continuing unconventional policies for much longer.

Although the Fed is considering tapering its quantitative easing (QE), it will likely remain dovish and behind the curve overall. Like most central banks, it has been lured into a “debt trap” by the surge in private and public liabilities (as a share of GDP) in recent years. Even if inflation stays higher than targeted, exiting QE too soon could cause bond, credit, and stock markets to crash. That would subject the economy to a hard landing, potentially forcing the Fed to reverse itself and resume QE.

After all, that is what happened between the fourth quarter of 2018 and the first quarter of 2019, following the Fed’s previou  s attempt to raise rates and roll back QE. Credit and stock markets plummeted and the Fed duly halted its policy tightening. Then, when the US economy suffered a trade war-driven slowdown and a mild repo-market seizure a few months later, the Fed returned fully to cutting rates and pursuing QE (through the backdoor).

This all happened a full year before COVID-19 broadsided the economy and pushed the Fed and other central banks to engage in unprecedented unconventional monetary policies, while governments engineered the largest fiscal deficits since the Great Depression. The real test of the Fed’s mettle will come when markets suffer a shock amid a slowing economy and high inflation. Most likely, the Fed will wimp out and blink.

As I have argued before, negative supply shocks are likely to persist over the medium and long term. At least nine can already be discerned.

For starters, there is the trend toward deglobalization and rising protectionism, the balkanization and reshoring of far-flung supply chains, and the demographic aging of advanced economies and key emerging markets. Tighter immigration restrictions are hampering migration from the poorer Global South to the richer North. The Sino-American cold war is just beginning, threatening to fragment the global economy. And climate change is already disrupting agriculture and causing spikes in food prices.

Moreover, persistent global pandemics will inevitably lead to more national self-reliance and export controls for key goods and materials. Cyber-warfare is increasingly disrupting production, yet remains very costly to control. And the political backlash against income and wealth inequality is driving fiscal and regulatory authorities to implement policies strengthening the power of workers and labor unions, setting the stage for accelerated wage growth.

While these persistent negative supply shocks threaten to reduce potential growth, the continuation of loose monetary and fiscal policies could trigger a de-anchoring of inflation expectations. The resulting wage-price spiral would then usher in a medium-term stagflationary environment worse than the 1970s – when the debt-to-GDP ratios were lower than they are now. That is why the risk of a stagflationary debt crisis will continue to loom over the medium term.

This article was first published in the Project Syndicate


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OPINION

Rescuing Nigeria: How to Break the Cycle of Decline and Bring Progress

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Omano Edigheji

Nigeria has abundant human and natural resources but remains mired in underdevelopment. There are high levels of povertycorruptionunemployment and inequality. The country is currently witnessing a rise in ethnic militias and terrorism, adding to the threats posed by armed herdsmen’s deadly clashes with rural communities over land.  The nation suffers from poor economic management and a political leadership that has failed to promote structural transformation of the economy and politics.

I am a political scientist with research specialisation in the political economy of development. In my view, Nigeria’s social, economic and political crises stem from the absence of a grouping of people who put the country’s interests first. I call this grouping a developmentalist coalition.

I argue that for Nigeria to realise its potential and forge a prosperous shared future, like-minded individuals motivated by the ideology of development nationalism must come together in a coalition.  Development nationalism refers to the commitment to advancing one’s country and ensuring its prosperity. This includes enhancing the capabilities of its people so they can reach their potential and contribute to national progress. Individuals like this put loyalty to their country above other identities or considerations.

This coalition must focus on enhancing the nation’s productive capacity and uplifting the well-being of its citizens. Together, they can break the cycle of underdevelopment and achieve lasting progress. And this can be measured through the creation of a predictable governance structure characterised by the rule of law and the provision of essential public goods to citizens.

Developmental nationalism

Developmentalist coalitions shape political and economic affairs in most developed nations. In China, Malaysia, Mauritius, South Korea, Singapore and other countries that have tried to catch up with advanced nations, developmental nationalism has played a significant role.

In some cases, a developmentalist elite creates its own political party. An example of this is the People’s Action Party founded by Singapore’s first prime minister, Lee Kuan Yew, and his colleagues. The Labour Party in Norway, a coalition mostly of workers and farmers, is another example.

In other instances, members of this elite join different political parties. When developmentalists are the dominant political elite, any party in power ensures that it upholds standards that reflect the core principles upon which the country is founded.

Developmental elites articulate values that define and bind their nations. They provide moral and political leadership, as Nelson Mandela did in South Africa.

Most of these elites want to have inclusive economic and political institutions that help them achieve their development objectives.

Why Nigeria needs developmentalist coalitions

Since Nigeria became independent from Britain in 1960, most of those who have overseen the country’s political and economic landscape have not acted in a nationalistic or patriotic manner. Instead, they have followed their self-interest and exploited the Nigerian state for personal gain. As a result, the economy remains undiversified, with a small and declining manufacturing sector, thereby missing out on the potential for job creation.

Successive administrations in the last 26 years have allocated less funding to the education sector than the 26% of the national budget recommended by Unesco. The political elite have not built an economy that will create decent jobs for the youth. Also, they have fostered an education system that produces graduates who do not have the skills to start enterprises.

Most young Nigerians are engaged in the informal sector, with its associated problems: unstable jobs, hazardous working conditions, and a lack of decent wages. Most youths are underemployed and in low value-added economic activities. This means Nigeria is missing out on the potential benefits of its youthful population. About 70% of Nigeria’s population of over 200 million are under 30 years old, and 41% are younger than 15. Political leaders have failed to create an environment that allows them to achieve their full potential.

In Nigeria, the issue is not the lack of individuals focused on development. These people exist across all segments of the Nigerian society, including government. The real problem is that they haven’t formed a coalition. As a result, they cannot act collectively and cohesively to invest in Nigeria’s greatest asset: its people; and to promote industrialisation. Now is the time to form the developmentalist coalition to change the governance and development trajectory of the country.

What to do

In Nigeria, a broad-based coalition of developmentalist elites needs to be led by individuals with a clear vision for development and national cohesion. Members of this coalition could establish a political party to contest elections, gain political power, and use their positions in government to develop the nation.

Party members must be disciplined and subordinate their personal ambitions to those of the party and the national interests. The party must not become an empire of powerful individuals: instead, its organs must be allowed to function. Establishing this coalition is the way to end Nigeria’s endemic corruption and build a robust manufacturing sector and a thriving digital economy.

It also needs to promote agro-allied industry, investment in infrastructure, job creation and poverty reduction. This coalition should aim to transform Nigeria’s democracy into a system where political parties and elected representatives genuinely serve the people.

Omano Edigheji is an Associate Professor of Practice, University of Johannesburg

Courtesy: The Conversation


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OPINION

The United Nations, Ukraine, and the Crumbling Pillars of Global Order

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Dr. Hasim Turker

On February 24, 2025, the United Nations General Assembly witnessed an event that sent shockwaves through diplomatic circles worldwide. A resolution condemning Russia’s invasion of Ukraine passed with 93 votes in favor, 18 against, and 65 abstentions. Yet, it was not the overall result that captured global attention—it was the fact that the United States, long considered Ukraine’s staunchest supporter, voted against the resolution alongside Russia. In parallel, the UN Security Council adopted a US-drafted resolution that called for a “swift end” to the conflict but conspicuously omitted any attribution of blame to Moscow. The resolution, supported by Russia and China, stood in stark contrast to previous UN votes that had unequivocally condemned Russia’s actions.

These votes were not just procedural moments in international diplomacy. They signaled a tectonic shift in US foreign policy —one that moves away from the moral and strategic certainties of the past and toward a transactional, interest-driven realignment. The implications of this shift are profound, not just for Ukraine but for the entire fabric of global alliances, particularly in the Asia-Pacific, where long-standing US security commitments are now being scrutinized with heightened concern.

 From moral clarity to strategic ambiguity: The US position at the UN

Historically, the United States has used the UN as a platform to advance its vision of a rules-based international order, frequently rallying allies to uphold democratic values and deter authoritarian aggression. The UN votes on Ukraine, however, revealed a stunning reversal of this long-held strategy. By opposing a resolution that explicitly condemned Russia’s invasion, Washington abandoned its traditional role as a guarantor of Ukraine’s sovereignty. As for the US-drafted UNSC resolution, the abstentions from key European allies—France, the UK, Denmark, Greece, and Slovenia—further underscored the growing transatlantic rift regarding how to handle the conflict.

For European nations, the shift in US posture raised existential questions. If Washington could alter its stance on Ukraine so dramatically, what guarantees did NATO allies have that their security interests would remain non-negotiable? Would a similar transactional approach emerge in Asia, where China’s assertiveness threatens US allies such as Japan, South Korea, and Taiwan?

 A signal to Moscow, a green light to Beijing?

The immediate beneficiary of the US policy shift is Russia. While previous UN resolutions had overwhelmingly isolated Moscow, the latest votes demonstrated that the diplomatic tide was turning. By securing Washington’s opposition to an anti-Russia resolution, the Kremlin gained not only symbolic validation but also tangible diplomatic breathing room. The global narrative that once portrayed Russia as an aggressor is now being muddied by the strategic recalibrations of the United States.

Yet, the greater strategic consequence may lie in the Asia-Pacific, where China is closely studying Washington’s evolving foreign policy doctrine. If the U.S. can pivot away from Ukraine so decisively, why should allies in the Indo-Pacific expect unwavering American support in the event of a crisis? This question is particularly pressing for Taiwan, whose security rests on implicit US commitments. If Taiwan were to face military aggression from China, would Washington maintain its traditional security guarantees, or would it adopt a similarly pragmatic, negotiation-driven approach?

 The Asia-Pacific: Unraveling the trust factor

Japan and South Korea, two of the most critical US allies in the region, have already begun recalibrating their security postures in response to shifting priorities in Washington. South Korea, for instance, recently announced a record-breaking $46.3 billion defense budget for 2025, reflecting deep-seated concerns about regional stability. Meanwhile, Japan has accelerated its military modernization efforts, focusing on strengthening its air and naval capabilities to counter potential threats from both North Korea and China.

For these allies, Washington’s shifting stance at the UN is not an isolated event—it is a warning sign. The Trump administration’s willingness to negotiate directly with Russia over Ukraine, even at the cost of sidelining Kyiv, suggests that similar deals could be struck elsewhere, depending on shifting US interests. If Taiwan becomes the next crisis zone, Tokyo and Seoul must now contemplate the possibility that Washington might prioritize a grand bargain with Beijing over steadfast support for its Indo-Pacific allies.

 The transactional turn in global diplomacy

At the heart of this new paradigm is a fundamental shift in how the United States approaches alliances. The post-World War II model, built on unwavering commitments and long-term strategic partnerships, is being replaced by a framework that evaluates relationships through a cost-benefit lens. Trump’s handling of Ukraine exemplifies this approach: rather than defending Ukraine as a matter of principle, Washington is now considering what it can extract from the situation, including economic leverage over Ukraine’s vast natural resources.

This transactional mindset is not lost on allies and adversaries alike. For nations like India and Vietnam—non-treaty partners that maintain strategic ties with Washington but also engage with Beijing—the lesson is clear: the U.S. is willing to pivot rapidly if its national interests dictate such a move. This could push these nations to hedge their bets, seeking a more balanced approach between the U.S. and China rather than placing full confidence in US commitments.

 A future defined by uncertainty

As the dust settles from the UN votes, one reality is undeniable: the credibility of US commitments is now under question across multiple theaters of geopolitical competition. The immediate consequences are already unfolding in Ukraine, where European allies must now decide how to fill the gap left by Washington’s wavering stance. But the longer-term impact will be felt in the Indo-Pacific, where the US security umbrella has long been the bedrock of regional stability.

If the United States is no longer willing to stand unequivocally by its allies, then nations that have historically depended on US security assurances must prepare for an era of greater self-reliance. This could mean more aggressive military posturing, accelerated nuclear deterrence programs, and a fundamental reshaping of regional alliances.

For the broader international system, the consequences could be even more profound. The UN votes on Ukraine may be remembered as the moment when the rules-based international order began to fracture, not because of external threats, but because the world’s leading power chose to play by different rules.

Dr. Turker is the academic coordinator and senior researcher at Bosphorus Center for Asian Studies, Turkey, Ankara


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OPINION

Governor Ahmad Aliyu Sokoto: Pioneering Sokoto State’s Transformation through Visionary Leadership

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By Dr Kabir Umar Dasuki

In the realm of governance, it is rare to witness leaders who transcend political affiliations to deliver impactful, people-centered policies. His Excellency, Governor Ahmad Aliyu of Sokoto State, since assuming office in 2023, has distinguished himself as one such leader. His administration has laid the groundwork for sustainable development and social progress, earning commendation across political divides. As a member of the opposition, this acknowledgment is not borne out of sycophancy but from a genuine recognition of good governance and a commitment to celebrating impactful leadership.

A Vision for Educational Transformation

The APC led administration of Governor Ahmad Aliyu Sokoto has prioritized education as a cornerstone of societal progress. A significant highlight of his tenure is the intervention for 88 Sokoto State medical students affected by the crisis in Sudan. Rather than allowing these future healthcare professionals to languish in uncertainty, his administration facilitated their transfer to Usmanu Danfodiyo University Medical College, ensuring their education remained uninterrupted. This bold initiative underscores his administration’s commitment to nurturing human capital and fostering resilience in the face of challenges.

Moreover, the government has invested heavily in educational infrastructure and teacher training programs. By creating an enabling environment for both students and educators, the administration is building a foundation for a more enlightened and competitive youth population in Sokoto State.

Commitment to Workers’ Welfare

One of the most commendable aspects of Governor Aliyu’s governance is his dedication to workers’ welfare, particularly retired civil servants. For years, pensioners in Sokoto State endured hardships due to unpaid gratuities and pensions. Governor Aliyu’s administration took decisive action to address these issues, clearing arrears and ensuring timely payments. This commitment has restored dignity and financial stability to thousands of retirees.

As a direct beneficiary of this policy, I can personally attest to its transformative impact. After years of waiting, I received my gratuity under his administration, a testament to his resolve to honor commitments and prioritize the well-being of retirees. This act of leadership goes beyond policy—it represents a compassionate approach to governance that recognizes the sacrifices of public servants.

Additionally, his administration has introduced reforms to streamline the pension system, reducing bureaucratic bottlenecks and ensuring that retirees receive their entitlements without undue delays. Active civil servants have also benefited from prompt salary payments and capacity-building programs aimed at enhancing their professional development.

Infrastructure Development for a Sustainable Future

Infrastructure development has been a hallmark of Governor Aliyu’s administration. Recognizing the pivotal role infrastructure plays in economic growth and social mobility, the government has allocated substantial resources to transformative projects. The 2025 budget, aptly named the “Transformation and Infrastructural Sustainability Budget,” allocated ₦349.4 billion—approximately 66% of the total budget—to capital projects. This bold commitment reflects the administration’s focus on fostering connectivity, improving public facilities, and creating an enabling environment for economic activities.

Roads, bridges, and public buildings are being constructed and rehabilitated to enhance accessibility and stimulate commerce. These efforts are not merely about constructing physical structures; they symbolize a commitment to creating lasting impact and empowering communities across Sokoto State.

Addressing Water Scarcity

Water scarcity has long been a pressing issue in Sokoto State. Governor Aliyu’s administration has tackled this challenge head-on, awarding a ₦14 billion contract for a water project capable of delivering 40 million gallons per day to Sokoto metropolis. This ambitious initiative is set to provide potable water to thousands of households, improving public health outcomes and supporting local industries reliant on water resources.

By prioritizing such a critical sector, the administration demonstrates its understanding of the intersection between basic amenities and overall quality of life. This project is a beacon of hope for residents who have long struggled with inadequate access to clean water.

Enhancing Security and Community Resilience

Security remains a paramount concern for any government, and Governor Aliyu’s administration has shown commendable resolve in addressing this issue. Over 130 patrol vehicles have been procured and distributed to security agencies, significantly enhancing their operational capacity to combat banditry and other criminal activities.

In addition, the establishment of the Community Guard Corps, equipped with 40 patrol vehicles and 700 motorcycles, reflects a grassroots approach to security. This initiative empowers communities to take an active role in safeguarding their neighborhoods, fostering resilience and collaboration between citizens and security agencies.

Fiscal Responsibility and Governance:

In an era where many states grapple with unsustainable debt, Sokoto State under Governor Aliyu stands out for its fiscal discipline. His administration has managed to execute numerous developmental projects without resorting to loans, maintaining a debt-free status with contractors. This prudent approach ensures long-term sustainability and reflects a governance model rooted in accountability and financial responsibility.

Strengthening Religious and Community Cohesion

Governor Aliyu’s administration has shown a unique commitment to fostering unity and inclusivity across Sokoto State. Monthly cash allocations to Juma’at mosques and grassroots preachers, coupled with food and cash assistance, have strengthened community ties and supported religious leaders in their efforts to promote harmony and social values. These measures highlight the governor’s dedication to creating a cohesive society where every segment feels valued and included.

Challenges and Areas for Improvement

While Governor Aliyu’s achievements are commendable, there are areas where, in my opinion, further attention can accelerate progress:

Healthcare: Sokoto State can benefit from a comprehensive upgrade of healthcare facilities, particularly in rural areas, to improve access and quality of care.

Agriculture and Livestock Development: Given Sokoto State’s potential as an agricultural hub, policies that promote mechanized farming, irrigation systems, and agro-processing industries can enhance food security and economic diversification. Furthermore, Sokoto State has immense potential to become a leader in livestock production. The establishment of a modernized meat processing industry would enable the state to tap into the lucrative international meat market. Such a program should focus on enhancing livestock health, breeding practices, and processing facilities that meet global standards. This initiative would create jobs, boost revenue, and position Sokoto as a major player in the global Halal meat market.

Youth Empowerment: Expanding skills acquisition programs and providing startup grants can reduce unemployment and encourage entrepreneurship among youth.

Urban and Rural Development: Initiatives to improve urban planning and rural electrification. Conclusion: Leadership That Transcends Politics

Governor Ahmad Aliyu’s administration has set a high standard for governance in Sokoto State. His achievements in education, workers’ welfare, infrastructure, water resource management, security, and fiscal responsibility are not only commendable but transformative. These milestones are a testament to his vision, compassion, and unwavering commitment to the people of Sokoto State.

As a member of the opposition in the state, it is my duty to recognize and celebrate impactful leadership, irrespective of political affiliations. Governor Aliyu’s governance serves as a shining example of what is possible when leaders prioritize the needs of the people over partisan interests. His administration’s legacy will undoubtedly inspire future leaders and set a benchmark for effective governance in Nigeria.

May his achievements continue to bring progress and prosperity to Sokoto State, and may other leaders across the nation emulate his dedication to service and excellence.

Dr Kabir Umar Dasuki is the Chairman/CEO of DUKE Consult Ltd, an Abuja based consulting firm.


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