Let us continue by looking at the E.U. economies, and how the ECB dealt with the challenges they faced. For sure, a decision by the Board would not be unanimous, as it was in the U.S. It is simply difficult to imagine the Bundesbank President voting the same way as the central bank governors of Italy, Spain, or Portugal, respectively, in this matter. Nevertheless, it has been reported that the ECB has been quite firm in its struggle to calm inflation.
Then there is the BoJ, which frankly does not seem to be facing the same problem. Inflation in Japan has not been as steep as it is in the U.S. and E.U., for sure. The main explanation for this is that the wage rate in Japan has not risen for quite some time. Thus the challenge that BoJ Governor Kuroda is currently facing is not as dire as that looming before his colleagues in the U.S. and E.U.
And what about the emerging market economies?
Finally, what is happening with Emerging and Less Developed economies? The emerging economies and the middle-income ones, such as Indonesia, have certainly been in better shape than those of developed economies, both in terms of their GDP growth rates and their inflation rates. Their GDP growth has mostly been around 5 per cent, and the rate of inflation a bit lower than that – between 3 to 4 per cent. The exception is Sri Lanka, in turmoil because of the mess left behind by runaway Former President Rajapaksa. However, unemployment is generally in a higher range than the 3.6 per cent rate reported by the U.S.; what’s more, the semi-unemployed are an important element of these economies.