Hello. Today we look at the ECB’s challenges in adapting policy to its new strategy, urbanization in China and how men’s employment is recovering more quickly than women’s.
Policy Redo
European Central Bank officials are about to tackle the first of two looming monetary-policy shifts as they hone their stance to the evolving coronavirus pandemic.
The initial step, to be unveiled on Thursday, will implement the new strategy that officials agreed upon this month. Most in focus with investors will be revamped guidance on the path of future policy, which President Christine Lagarde has already said “will certainly be revisited.”
Indications in recent days were that the Governing Council was finding it hard to agree on a way forward there. More-hawkish and more-dovish members have been in intense and heated discussions on how best to demonstrate the persistence needed to hit the new inflation goal of 2%, according to officials familiar with the matter.
However that to-and-fro is resolved, it’ll only address the most immediate of the ECB’s challenges. With the pandemic subsiding — albeit amid the threat of setbacks from a wave of virus variants — it will also need to decide how to phase out its emergency bond-buying program and how to adapt an older program. That debate is expected in September.
The strategy review lasted 18 months and was unanimously adopted by the Governing Council. As Jana Randow and Alexander Weber wrote yesterday, that outcome was the result of constructive engagement by Germany’s traditionally hawkish Bundesbank.
But such agreements in principle are no guarantee of consensus in practice.
- Got tips or feedback? Email us at ecodaily@bloomberg.net
The Economic Scene
Catching Up
China’s urbanization rate has soared since economic reforms in late 1970s
Source: World Bank, National Bureau of Statistics of China
China’s urbanization rate is set to beat previous international predictions over the next decade, providing an antidote to the country’s shrinking workforce and declining birthrate, an influential Chinese economist said. About 75% of the Chinese population will be living in cities by 2030, up from the current 64%, according to Lu Ming, an economics professor at the Shanghai Jiao Tong University specializing in urban development.
Rapid urbanization has fueled China’s economic boom over the past four decades, with the share of urban residents surging from around 20% of the population when economic reforms started in 1979. In the past decade alone, the country added more than 236 million city dwellers, supporting a booming housing market, a rising retail sector, and global commodity markets.
Today’s Must Reads
- Shortest downturn | The U.S.’s Covid-19-induced recession ended in April 2020 after two months, making it the nation’s shortest downturn on record and snapping a 10 1/2-year expansion.
- Vietnam deal | The U.S. Treasury Department and Vietnam’s central bank said they reached an agreement under which Vietnam will allow more flexibility in its currency.
- China rates | Banks in China kept the benchmark loan rate steady, indicating that the central bank is continuing to keep policy stable despite the recent move to add liquidity to the financial system.
- Leaving schoolchildren behind | Latin America was making educational progress until the pandemic. Now it leads the world in the length of classroom closures.
- Trucker trouble | U.K. industries from hospitality to agriculture and health care are having to adapt to a sudden reduction in the availability of cheap labor from the European Union, a situation that’ll be exacerbated by the lifting of most coronavirus restrictions.
- Vaccine lag | Africa is the least inoculated region against Covid-19, underscoring the need to for the continent’s new free-trade pact.
Need-to-Know Research
Disparate Impact
Job losses during the pandemic disproportionately hit women
Source: ILO
The disproportionate hit that Covid-19 dealt to female workers is set to endure, with men’s employment recovering more quickly than women’s, according to the International Labour Organization.
There will be 13 million fewer women working this year than in 2019, while men will have succeeded in recouping the crisis-induced losses, the Geneva-based body estimated in a report. The ILO urged governments to enact policies that focused on job creation and retention that benefited women, particularly in sectors like health care and education.
- For the latest on how companies and institutions are confronting gender, race and class, subscribe to the Equality newsletter
On #EconTwitter
The International Monetary Fund’s chief economists ponders what’s different about inflation this time round.
Read more reactions on Twitter
Enjoy reading the New Economy Daily?
- Click here for more economic stories
- Tune into the Stephanomics podcast
- Subscribe here for our daily Supply Lines newsletter, here for our weekly Beyond Brexit newsletter
- Follow us @economics
The fourth annual Bloomberg New Economy Forum will convene the world’s most influential leaders in Singapore on Nov. 16-19 to mobilize behind the effort to build a sustainable and inclusive global economy. Learn more here.