On November 30th, The Bank of Korea (BoK) voted to raise the base rate for the first time since May 2011. It was increased by 25 basis points from a record low of 1.25%. The Board judged it the right time to begin the process of policy normalisation with inflation comfortably within the BoK’s target range and GDP growing at the fastest pace for over six years in Q3 this year, at 1.4%. Refresh the chart in your browser | Edit chart in Datastream As we have informed our clients previously, adopting ultra-loose monetary policy can do more to hinder than help

   Refresh the chart in your browser | Edit chart in Datastream Want more charts and analysis? Access a pre-built library of charts built by Fathom Consulting via Datastream Chartbook in Thomson Reuters Eikon.   UK real wages have fallen behind productivity since the recession. The performance of productivity has been very poor, but at least it has been positive, while real wages are lower now than they were at the start of 2009. The gains from higher output have been returned to the owners of capital rather than to labour. That shortfall creates potential scope for real wages to recover – to run faster than

Dissecting France’s productivity performance Emmanuel Macron has convincingly defeated Marine Le Pen to become President of France. Although we have not passed peak protectionism, we can shift our focus back to worrying about the actual economics – at least in France’s case for now. According to Nobel laureate Paul Krugman: “Productivity isn’t everything, but in the long run it is almost everything.” We concur.   What explains France’s ‘productivity puzzle’, i.e. the country’s outperformance of its peers on the GDP per hour measure, but not the GDP per capita measure, and the divergence between the two gauges of productivity in

Despite a strong Q2, South Africa’s economic outlook remains bleak South African GDP expanded at an annualised rate of 3.3% in Q2, aided by a rebound in mining. But the country’s economic outlook remains bleak. China’s decision to ‘double down’ on its investment-led growth model has provided South Africa some breathing space, but headwinds, including persistently high unemployment, remain. Political developments are an additional woe, and have been the focus of recent investor concern. Looking ahead, the economy’s structural weaknesses, exemplified by poor labour market dynamics, are likely to impair its growth performance. Data revealed that South Africa’s (SA’s) GDP

Although US labour market productivity in the first quarter of this year was revised up on Tuesday, broader productivity trends remain a concern. Janet Yellen expressed her worries about this in a speech this week and wants politicians to do more to encourage greater spending on investment and education. In our view, the policy mix should shift towards greater fiscal stimulus in the years ahead. That is because we believe that ultra-loose monetary policy is now causing more harm than good. Indeed, our analysis finds that low interest rates may be preventing the ‘gales of creative destruction’ that typically boost

We have long doubted China’s official GDP data. Now we turn our attention to China’s labour market data. Over the past ten years or so, the headline unemployment rate has fluctuated between 4.0% and 4.3%. We find it implausible that the degree of slack in China’s labour market can appear so rigid, at a time when the pace of economic growth in China has varied enormously. Here we introduce our own, top-down measure of the amount of spare capacity in China’s labour market. Our China Underemployment Indicator (or CUI) suggests that the degree of underemployment in China may have trebled