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Next year will mark the 250th anniversary of the ratification of the Declaration of Independence, the founding document of the United States. But another foundational document, fundamental to our understanding of economics, will reach the same milestone in 2026: Adam Smith’s The Wealth of Nations. At a time of rapid economic and structural transformation, its insights are worth revisiting.Two stand out. One is that the “invisible hand” of markets efficiently allocates resources, as long as certain conditions – including a stable currency, a degree of trust and moral rectitude among economic actors, and credible property rights – are in place. Externalities (the unpriced impact of an entity’s activities on others) and informational gaps and asymmetries diminish the invisible hand’s efficiency and performance.The second, arguably more important insight is that an economy’s efficiency and productivity are enhanced by the “division of labour,” known today as “specialisation.” A specialised economy is powered by various pockets of knowledge and expertise, which take advantage of economies of scale, learning, and enhanced incentives for innovation. Since specialisation does not work in the absence of a reasonably efficient method of exchange, it depends on Smith’s invisible hand. As specialisation advances, so does the economy’s complexity.As Smith noted, however, specialisation is limited by the “extent of the market”: a small market cannot create enough demand to sustain a wide variety of specialised businesses. That is why improvements in transportation and communication linkages, which lower the cost of addressing an expanding market, have enabled greater specialisation.Another important potential constraint on specialisation is the risk it inevitably generates. Since an economy’s patterns of specialisation are structural, they take time to change. So, if the trading system is disrupted, or certain skills or industries are rendered obsolete (such as by technological innovations or shifting demand patterns), individuals, firms, and even entire economies must undergo a transition, which may prove difficult and prolonged.In the nineteenth and early twentieth centuries, as economies became more specialised, various policies, institutions, and conditions – from antitrust to social safety nets to the maintenance of macroeconomic and monetary stability – gradually emerged to mitigate the associated risks. But these were largely national-level solutions, and, after World War II, specialisation went global.What began as a means of supporting the postwar economic recovery soon became a comprehensive transformation. Colonial empires were abandoned, along with their asymmetric economic structures, and mercantilism gave way to free trade. Add to that advances in transportation and communications technology, accelerated by the digital revolution, and the first constraint on specialisation – the “extent of the market” – was radically loosened.For developing economies, this was a game-changer. Given their low per capita GDP, they could not generate sufficient domestic demand to benefit from the efficiency and productivity gains of specialisation. But once they gained access to foreign markets and technologies, they capitalised on their comparative advantages and achieved rapid GDP growth. Increasing specialisation was thus accompanied by a geographic shift in economic activity.The resulting structural disruptions outpaced the evolution of governance structures capable of mitigating the proliferating risks. For a while, this did not seem to matter much: the advanced economies, especially the US, still underwrote international economic governance, making the rules and sponsoring the institutions that kept the system running. But, eventually, the shift in global economic power reached a tipping point: the demand constraint on specialisation was loosened to the point that the risk constraint was kicking in. As the structural disruptions grew more pronounced, popular frustration deepened across the advanced economies, fuelling a social and political backlash. Then, a proliferating series of shocks – escalating climate impacts, the Covid-19 pandemic, the wars in Ukraine and Gaza, and rising geopolitical tensions – reinforced this shift. Donald Trump’s return to the White House, with his “America first” foreign policy and preference for bilateral dealmaking, cemented it.As a result, many countries now view economic security as inextricably linked to national security: while specialisation remains intact within economies, it is being partly reversed at the international level. Although it is impossible to know precisely where this process will lead, one can expect adverse consequences for productivity and growth – in effect the price of increased resilience and reduced risk. Countries with less capacity to generate domestic demand – whether because of low per capita GDP or small population size – will suffer the most, with the extent of their losses depending on how much access to global markets they retain.But Smith’s model of specialisation may soon face an even more fundamental shift. Recall that it is based on the creation of pockets of specific knowledge and expertise that are not easily acquired or transferred. But generative AI models, among their many effects, now appear to be on course to deliver expertise in almost any area, to anyone who wants it, at very low cost.The potential consequences are far-reaching. If expertise becomes less scarce, the price it commands will fall. Only knowledge and skills that remain difficult to transfer – say, because they cannot easily be described or documented – will increase in value. In other words, a significant share of human capital might not be worth nearly as much at some point in the future as it was in the past 250 years, but another share could be worth much more. A question that must now be investigated is how big each of these shares will be.Nearly 250 years after Smith introduced the concept of specialisation, it remains a key feature of our economies. But it has also changed profoundly. It is in partial retreat in the global economy, as the perceived risks of interdependence rise. Artificial intelligence will probably not reduce specialisation, but by altering the knowledge-transfer equation, it may change the relative prices of the human capital associated with various types of specialised knowledge. — Project SyndicateMichael Spence, a Nobel laureate in economics, is Emeritus Professor of Economics and a former dean of the Graduate School of Business at Stanford University and a co-author (with Mohamed A El-Erian, Gordon Brown, and Reid Lidow) of Permacrisis: A Plan to Fix a Fractured World.

As Scottie Scheffler prepares to put the finishing touches on another Tiger-like season, he reflected Wednesday on a critical lesson he learned from Tiger Woods.“I’ve only played one round of tournament golf with Tiger Woods, and it completely changed the way I look at how I play tournaments,” Scheffler told reporters at Atlanta’s East Lake Golf Club, where he will attempt to defend his Tour Championship this week against 29 of the PGA Tour’s top talents.Scheffler was paired with Woods during the final round of the 2020 Masters, which had been moved from April to November and was played without spectators due to the Covid-19 pandemic.Scheffler remembered how Woods responded after carding a 10 at the par-13 12th hole at Augusta on that Sunday. Woods birdied five of the last six holes, displaying a level of focus and competitiveness that has stuck with Scheffler throughout his own reign as the world’s No 1 golfer.“(I) was like, what’s this guy still playing for? He’s won the Masters four or five times. Best finish he’s going to have is like 20th place at this point,” Scheffler said.“I just admired the intensity that he brought to each round, and that’s something that I try to emulate. If I’m going to take time to come out here each week - like it’s not an easy thing to play a golf tournament. If I’m going to take a week off, I might as well just stay home. I’m not going to come out here to take a week off. If I’m playing in a tournament, I’m going to give it my all.“That’s really all it boils down to.”Scheffler, 29, continued his remarkable season with a victory last week at the BMW Championship. Including his wins at the PGA Championship and The Open Championship, he became the first PGA Tour golfer since Woods in 2006-07 with five or more titles in back-to-back seasons.Scheffler has 18 career wins on the PGA Tour. He was the Rookie of the Year in 2020 but didn’t win his first tourney until 2022.“The reason I felt like I hadn’t won yet is I hadn’t put myself in position enough times. I’d only played in a couple final groups. I always found myself just a little bit on the outside looking in, and that’s one of the things I learned from playing with Tiger,” Scheffler said.“It was like, we’re in 20th place or whatever going into Sunday at the Masters, Tiger has won five Masters, he’s got no chance of winning the tournament.“Then we showed up on the first hole and I was watching him read his putt, and I was like, ‘Oh, my gosh, this guy is in it right now.’“That was something that I just thought about for a long time. I felt like a change I needed to make was bringing that same intensity to each round and each shot. And I feel like the reason I’ve had success in these tournaments is - I don’t hit the ball the furthest. The things that I do on the golf course, other people can do. I think it’s just the amount of consistency and the intensity that I bring to each round of golf is not taking shots off, not taking rounds off, not taking tournaments off.”The lessons learned in Augusta in 2020 have Scheffler in position this week to do something even Tiger Woods did not accomplish: becoming the first to win back-to-back Fed Ex Cups.

The UK economy has stumbled from crisis to crisis over the past decade, including the divisive 2016 public vote to leave the European Union, the pandemic and then a bout of inflation that has seen prices in Britain rise more than in France and Italy.The population of the UK rose about 5% between 2015 and 2023, with official projections suggesting a further 1mn people have been added since then.UK economy outperformed other Group of Seven nations with growth of 1.1% in the first half of the year, yet did slightly worse when adjusted for the population.Per capita output was barely higher in the second quarter than before the pandemic, whereas the economy as a whole is about 5% larger.Business investment fell by 4% from the first quarter and household spending growth was weak.The UK economy has lost its edge over Italy and slipped further behind France over the past decade, according to per head gross domestic product figures that reveal a stark underperformance fuelled by a population surge, high inflation and tepid growth.The findings will ring alarm bells in Keir Starmer’s government, which is looking at how much the economy generates for each resident rather than aggregate output as a gauge of the living standards it has pledged to improve.Italy, long a symbol of European economic stagnation, has almost completely closed a gap with the UK that was around $4,000 per head just before the 2016 Brexit vote, International Monetary Fund data based on purchasing power parities show.Back then, the UK was also roughly level with France. Now, with a per capita output of $54,556, Britain is estimated to be just $500 ahead of Italy and almost $1,700 behind France.Britain’s economy is still suffering from long Covid, says some experts.The unmatched spike in public debt, the 1.2mn extra people on sickness benefits, the record tax burden, the bulging size of the state and — above all — weak economic growth are the lasting symptoms of decisions taken during the pandemic.While a post-pandemic burst of inflation has abated across much of the developed world, Britain is still stuck with the highest price growth among big western economies.Granted, consumer price inflation (CPI) is now far below where it was in late 2022, when it maxed out at 11.1%. That’s after the Bank of England aggressively ramped up benchmark interest rates from almost zero in late 2021 to 5.25% in 2023, sucking money out of the economy by hammering the purchasing power of borrowers.But it is back up again, with consumer prices climbing by 3.6% in June, up from 2.6% in March, leaving the bank with plenty of work to finally reach its 2% target, according to a Bloomberg report.Many economists say they believe Brexit has its fingerprints on the inflation troubles.Research by the London School of Economics suggested that a third of UK food price inflation from the end of 2019 to March 2023 was caused by Brexit because extra border costs added £7bn to grocery bills.Cautious British households are more inclined to save money than at any point since the run-up to the global financial crisis, according to a recent survey of consumer sentiment.Amid mounting job losses and rising inflation in the UK, GfK said its overall consumer confidence index slipped one point to minus 19 in July, partially reversing an improvement the previous month.It adds to growing evidence of the economic impact of the Labour government’s tax-raising budget and a spate of increases to household bills.Chancellor of the Exchequer Rachel Reeves is heading into a difficult autumn budget as economists make a common prediction: tax rises are in store.

Buy Now Pay Later (BNPL) is expected to make further inroads in Qatar’s financial landscape with more banks set to sign strategic pact with fintechs providing "growth enabling" services, according to experts."The lenders are seized of its (BNPL) opportunities in the banking space. Fintechs are enablers than competitors, there is a symbiotic relationship between the two," said a top official of a private sector bank, which is planning to enter in a strategic relationship with BNPL provider.This symbiotic relationship leverages the strengths of both entities, leading to a "win-win" situation, according to him.The streamlining and strengthening of operations at the Qatar Credit Bureau have also helped fintechs offering BNPL services to undertake quick due diligence regarding customers, the official said.Recently, Qatar Islamic Bank tied up with PayLater to deliver Shariah-compliant BNPL services to customers and merchants in Qatar, providing flexible financing solutions that promote financial inclusion and support the growth of the nation’s digital economy.BNPL, which is gaining momentum in the Middle East and North Africa region, is essentially a short term (no more than 12 months) interest free credit facility that allows a customer to split its transaction amount into instalment payments to allow repayment over a period of time.The maximum credit per customer at any point of time has been fixed at QR25,000, as per the Qatar Central Bank (QCB) regulations for the sector.The tech-savvy consumer base, the quest to explore the latest in online shopping and the alternative payment solutions with flexibility are giving the required thrust (for the BNPL segment), said the bank official.The QCB had approved five companies – Spendwisor; Qaiver FinTech; HSAB for Payment Solutions; Mihuru; and Pay Later Website Services – as a first cohort for the BNPL service; awarding entry into its exclusive sandbox programme.The banking regulator had in 2023 issued the BNPL regulations following the launch of its fintech strategy. The objectives of the BNPL regulations are to ensure that customers are provided with adequate protections without unduly impacting the availability and cost of BNPL products and services, to protect the rights of BNPL customers from unfair lending practices, and to encourage the development of the consumer credit industry.Terming that BNPL isn’t a trend — it’s a shift in mindset; Mohammed al-Delaimi, SkipCash’s founder and managing director, had said it introduces financial flexibility and responsible consumption, particularly in markets that have traditionally been underserved or cash-dependent.For small businesses, it means increased sales and better customer retention, while for consumers, it’s a lifeline to spread out essential purchases without falling into debt traps, he had said.The changing consumer preferences and the growing e-commerce market are paving the way for strong growth, the bank official said, adding the rise in e-commerce deals during the Covid-19 lockdowns led to a significant increase in the use of BNPL services.Snoonu had earlier this year joined forces with PayLater to enhance financial flexibility and reshape the digital shopping experience for consumers. Beema recently tied up with PayLater.LuLu AI, the investment arm of LuLu Financial Holdings, had announced a strategic investment in PayLater Qatar.

Manufacturers like US lawnmower maker The Toro Company are not panicking at the prospect of US President Donald Trump’s global trade tariffs. Despite five years of dramatic supply disruptions, from the Covid pandemic to today’s trade wars, Toro is resisting any temptation to stack its warehouses to the rafters.“We are at probably pre-pandemic inventory levels,” says its chief supply-chain manager, Kevin Carpenter, looking relaxed in front of a whiteboard at his office in Minneapolis. “I mean 2019. I think everybody will be at a 2019 level.” Among US manufacturers, inventories have roller-coasted this year as they rushed to beat Trump’s deadlines for tariff hikes, only to see them repeatedly delayed. But since their post-pandemic expansion, inventories have mostly contracted, according to US Institute for Supply Management data. Instead, “just in time” inventory management — which aims to increase efficiency and reduce waste by ordering goods only as they are needed — is back.But how can firms run lean inventories even as tariffs fluctuate, export bans come out of the blue, and conflict rages? One of the answers, they say, is artificial intelligence.Carpenter says he uses AI to digest the daily stream of news that could impact Toro’s business, from Trump’s latest social media posts to steel prices, into a custom-made podcast that he listens to each morning.His team also uses generative AI to sieve an ocean of data and to suggest when and how many components to buy from whom.It is a boom industry. Spending on software that includes generative AI for supply chains, capable of learning and even performing tasks on its own, could hit $55bn by 2029, up from $2.7bn now, according to US research firm Gartner, driven in part by global uncertainties.HYPE“The tool just puts up in front of you: ‘I think you can take 100 tonnes of this product from this plant to transfer it to that plant. And you just hit accept if that makes sense (to you),” McKinsey supply chain consultant Matt Jochim said.The biggest providers of overall supply chain software by revenue are Germany’s SAP, US firms Oracle, Coupa and Microsoft and Blue Yonder, a unit of Panasonic, according to Gartner.Generative AI is in its infancy, with most firms still piloting it spending modest amounts, industry experts say.Those investments can climb to tens of millions of dollars when deployed at scale, including the use of tools known as AI agents, which make their own decisions and often need costly upgrades to data management and other IT systems, they said.In commenting for this article, SAP, Oracle, Coupa, Microsoft and Blue Yonder described strong growth for generative AI solutions for supply chains without giving numbers.At US supply chain consultancy GEP, which sells AI tools like this, Trump’s tariffs are helping to drive demand.“The tariff volatility has been big,” says GEP consultant Mukund Acharya, an expert in retail industry supply chains.SAP said the uncertainty was driving technology take-up. “That’s how it was during the financial crisis, Brexit and Covid. And it’s what we’re seeing now,” Richard Howells, SAP vice president and supply chain specialist, said in a statement.An AI agent can sift real-time news feeds on changing tariff scenarios, assess contract renewal dates and a myriad of other data points and come up with a suggested plan of action.But supply chain experts warn of AI hype, saying a lot of money will be wasted on a vain hope that AI can work miracles.“AI is really a powerful enabler for supply chain resilience, but it’s not a silver bullet,” says Minna Aila, communications chief at Finnish crane-maker Konecranes and member of a business board that advises the OECD on issues including supply chain resilience. “I’m still looking forward to the day when AI can predict terrorist attacks that are at sea, for instance.” Konecranes’ logistics partners are deploying AI on more mundane data, like weather forecasts.The company makes port cranes that are up to 106m (348ft) high when assembled. When shipping them, AI marries weather forecasts with data like bridge heights to optimise the route.“To ship those across oceans, you do have to take into consideration weather,” Aila says.RISING COSTSBy keeping inventories low, firms can bolster profit margins that are under pressure from rising costs. Every component or finished product sitting on a shelf is capital tied up, incurring finance and storage costs and at risk of obsolescence.McKinsey has been surveying supply-chain executives since the pandemic. Its most recent survey showed that respondents relying on bigger inventory to cushion disruptions fell to 34% last year from 60% in 2022. Early responses from its upcoming 2025 survey suggest a similar picture, Jochim said.Gartner supply chain analyst Noha Tohamy says that without AI, companies would be slower to react and be more likely to be drawn into building up inventories.“When supply chain organisations don’t have that visibility and don’t really understand the uncertainty, we go for inventory buffering,” Tohamy says.But AI agents won’t put supply chain managers out of work, not yet, consultants say. Humans still need to make strategic and big tactical decisions, leaving AI agents to do more routine tasks like ordering and scheduling production maintenance.Toro supply chain chief Carpenter says that without AI, supply chain managers might need to run bigger teams as well.Is he worried that AI is coming for his job one day? “I hope it doesn’t take it until my kids get through college!”— Reuters

The US national debt has exceeded $37 trillion for the first time in the country's history, highlighting the rapid expansion of federal borrowing amid mounting criticism of the government's expansive spending policies.Data released by the US Treasury Department on Tuesday showed gross national debt reaching $37.005 trillion. According to the Congressional Budget Office, federal debt could climb to $54 trillion within a decade, driven by rising healthcare costs, an aging population, and the impact of elevated interest rates, which are increasing debt service burdens.Credit rating agencies have warned of the deteriorating fiscal outlook. In mid-2023, Fitch Ratings downgraded the US's long-term credit rating from AAA to AA+, citing worsening financial conditions and persistent political gridlock. In May 2025, Moody's followed suit, cutting its rating from Aaa to Aa1 and projecting that interest payments could surge from 9% of federal revenues today to 30% by 2035.Federal debt has surged in recent years, fueled by massive pandemic relief and stimulus measures under successive administrations. The Biden administration added about $4.8 trillion by September 2022, including $1.85 trillion for the American Rescue Plan and $370 billion for infrastructure projects. Under the former Trump administration, the debt grew by $7.5 trillion during his first term, with the COVID-19 crisis pushing the fiscal 2020 deficit to a record $3.1 trillion, followed by more than $2.7 trillion in 2021.The scale of the increase is striking: four decades ago, US federal debt totaled $907 billion. Today, interest payments in the current fiscal year -- which began in October -- have already outstripped combined spending on Medicare and the defense budget.

For many developing countries, the global economic landscape has shifted dramatically in recent years. Lower growth, disrupted supply chains, reduced aid flows, and heightened financial-market volatility represent significant headwinds. Underpinning these changes is a fundamental restructuring, driven by the developed world, of the postwar economic and financial order. Against this background, a handful of factors are becoming critically important for the current and future well-being of developing countries – and for the fate of multilateral institutions.For much of the period following World War II, the global economic and financial order operated as a core-periphery construct, with the US at its centre. The US provided global public goods, led multi-country policy co-ordination, and acted as a crisis manager, in accordance with a widely accepted set of rules and standards. The end goal was eventual convergence, securing an ever more integrated and prosperous world economy.But three factors undermined this order. First, insufficient attention was paid to increasingly destabilising distributional outcomes, leading to widespread alienation and marginalisation within politically influential segments of society. Instead of continuing to influence politics, economics became subservient to it.Second, the existing order struggled to integrate rapidly expanding large developing countries. The most notable example is China, whose immense economy but relatively low per capita income created a persistent misalignment between its domestic development priorities and its new global responsibilities. The world could no longer absorb smoothly the external consequences of China’s economic strategy, generating tensions that international governance structures have struggled to resolve.The third factor was the transformation of the US from a stabilising force to a source of volatility. Contributing to this development were the 2008 global financial crisis (which originated in the US), the weaponisation of tariffs against China in 2018, and the increasing use of payment-system sanctions. It accelerated in recent years with the failure to ensure the equitable global distribution of Covid-19 vaccines, the “uber-weaponisation” of tariffs against friends and foes alike, the dismantling of America’s foreign-aid system, and continued indifference to devastating humanitarian crises and repeated violations of international law.While the traditional core-periphery model is inherently ill-equipped to handle all this, there is nothing to replace it, resulting in a bumpy journey toward an unclear destination. Despite this, developing countries have navigated the changing landscape relatively well so far. Their success can be attributed largely to hard-won policy achievements, including the strengthening of macroeconomic frameworks and institutions in recent decades.But to maintain this positive trajectory in an increasingly challenging external environment, developing countries must affirm four key policy priorities. The first is to preserve macroeconomic stability while aggressively addressing any structural and financial vulnerabilities, including shallow domestic financial markets, weak regulatory frameworks, and governance deficits.The second priority is to strengthen international links that boost resilience, improve agility, and expand optionality. This requires coordinated, multiyear efforts to harmonise regulations, foster regional financial integration, and build trade infrastructure.Third, developing countries should prepare themselves to exploit the new opportunities created by innovations – from productivity enhancements in traditional sectors to improvements in social sectors where investment in human capital has the highest returns. AI, in particular, holds immense potential to revolutionise medicine, education, and agriculture, which could help these countries leapfrog traditional development stages. Building a supportive ecosystem requires investing in digital infrastructure, cultivating a skilled workforce, and developing an innovation-friendly regulatory environment.Lastly, with many US assets appearing overvalued and US Treasuries becoming more volatile, the small but strategically important subgroup of developing countries with high levels of foreign reserves and substantial financial wealth in dollars is being pushed to reconsider their holdings’ traditional US overweight. This process will inevitably be protracted and complex, and will require careful asset disaggregation, revised asset-allocation methodologies, and new investment mindsets that look beyond conventional safe havens.Multilateral institutions such as the World Bank and regional development banks have a crucial role to play in helping their members pursue such an approach. To become trusted advisers, these institutions must get better at compiling and disseminating best practices for new and evolving technologies that can improve health, educational, and productivity outcomes, and they must do more to promote these technologies’ uptake. For example, their staff must be equipped to answer questions about interacting with AI agents, leveraging innovations to deliver essential services, and managing the attendant risks.Multilateral institutions should also encourage regional links and projects that facilitate trade, expand cross-border infrastructure, and promote shared resource management. And in a world shaped increasingly by frequent shocks, there is an urgent need to enhance contingency-funding facilities, such as by strengthening risk-sharing tools.Of course, this should not undermine the essential work that these institutions perform in fragile countries. Given the overwhelming evidence that traditional development models struggle in countries with such serious governance and security challenges, this, too, is an area that requires more out-of-the-box thinking.AI and other emerging technologies provide developing countries a rare opportunity to unlock new pathways to inclusive economic growth. But exploiting this historic opportunity is far from automatic. Unless developing countries create the conditions necessary for the efficient and equitable diffusion of such innovations throughout their economies – starting, crucially, with the health and education sectors – they risk falling further behind, causing inequalities within and between countries to deepen, and accelerating the fragmentation of the global order.This commentary is based on the author’s keynote presentation at the 2025 Annual Bank Conference on Development Economics. - Project SyndicateMohamed A El-Erian, President of Queens’ College at the University of Cambridge, is a professor at the Wharton School of the University of Pennsylvania, an adviser to Allianz, and Chair of Gramercy Fund Management. He is the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (Random House, 2016) and a co-author (with Gordon Brown, Michael Spence, and Reid Lidow) of Permacrisis: A Plan to Fix a Fractured World (Simon & Schuster, 2023).

Global economy is no longer anchored in a stable inflationary or deflationary regime, but rather navigating a new era marked by structural volatility, according to QNB.While secular deflationary forces – particularly from technological progress, automation, and the digitisation of services – are expected to remain dominant over the long term, they are increasingly being punctuated by short, sharp episodes of inflation driven by supply shocks associated with geopolitical tensions, green transition costs, and policy uncertainty, QNB said in an economic commentary.This evolving landscape is not one of runaway inflation or entrenched deflation, but of heightened sensitivity to shocks, where pricing dynamics vary significantly across region, sectors, and time horizons, it said.Prices changes of key baskets of goods and services are some of the most closely watched metrics in macroeconomics, alongside economic growth.They are crucial indicators of economic health, affecting everything from purchasing power and household confidence to investment decisions and monetary policy.While some level of price appreciation (inflation) is a normal and even desirable feature of a growing economy, both excessive inflation and outright price declines (deflation) can cause significant distortions and long-lasting damage.Moderate inflation, like the one observed during the period of the so-called Great Moderation (1990-2007) in most advanced economies, typically reflects a vibrant economy that delivers well balanced growth. However, when inflation becomes excessive and persistent – as seen in periods of demand overheating, supply shocks, or poorly anchored expectations, such as during the immediate post-Covid pandemic period – it erodes real incomes, compresses profit margins, and destabilises financial markets. It also compels central banks to respond with aggressive policy tightening, which can trigger recessions or financial stress.Conversely, deflation – the sustained decline in the general price level or much lower than normal inflation – is often a symptom of deeper structural weakness, such as depressed demand, financial deleveraging, or demographic stagnation.Falling prices may appear positive on the surface, but they can discourage consumption, delay investment, increase real debt burdens, and trap economies in a vicious cycle of low growth and weak confidence.Japan’s experience in the 1990s and early 2000s remains a cautionary tale of the long-term consequences of entrenched deflation. To a lesser extent, the same is also true for other major economies following the Great Financial Crisis in 2007-08.Interestingly, following a period when pandemic-related supply side shocks triggered much higher than normal inflation, there is little consensus on whether inflation or deflation are going to be major driving forces over the medium- or longer-term.On the one hand, some analysts highlight that one of the key reasons inflation has re-emerged as a central economic concern lies in the unravelling of several structural forces that underpinned the “Great Moderation.”During that time, a confluence of factors helped supress price pressures and stabilise macroeconomic volatility: deepening globalisation fostered cheaper imports and offshoring; relative geopolitical stability ensured open trade routes and capital flows; supply chain integration enabled just-in-time production with minimal inventory costs; and the rise of rational, technocratic politicians and government officials who contributed to anchor economic expectations through credible policies and transparency, QNB said.In recent years, however, many of these tailwinds have turned into headwinds. Geopolitical fragmentation, marked by rising protectionism, US-China rivalry, the Ukraine War, and regional conflicts, has partially undermined trade openness and added uncertainty to global production networks, QNB noted.The Covid pandemic exposed the fragility of over-optimised supply chains, prompting a shift toward reshoring and redundancy that carries higher cost structure.Moreover, the populist backlash and politicisation of economic policy have, in some cases, weakened governance and institutional restraints on decision makers at least since the beginning of Trump 1.0 in 2017.Combined with demographic pressures (less people working to sustain more people not working), green transition costs, and strategic competition over critical technologies, these reversals support the argument of some analysts about a more inflation-prone environment ahead, in which price stability can no longer be taken for granted.On the other hand, many analysts argue that it would be a mistake to assume that the post-Covid and Ukraine War era is uniformly inflationary. Powerful disinflationary forces are at play and accelerating – particularly those rooted in technological innovation.Advances in digitisation, robotics, and artificial intelligence (AI) continue to disrupt traditional production functions, compress operating costs, and drastically reduce the marginal price of services and knowledge-based goods.The digital delivery of education, finance, media, and even healthcare is shifting cost structures downward, while automation and machine learning improve productivity in both manufacturing and services.Moreover, QNB noted, some geopolitical developments commonly viewed as inflationary – such as trade fragmentation – may actually have deflationary consequences under certain conditions.A pertinent historical analogy is the 1930s, when aggressive tariff barriers like the US Smoot-Hawley Act triggered retaliatory trade wars, leading not to higher prices, but to collapsing global demand and deflationary spirals.

Qatar National Bank (QNB) group said that secular deflationary forces, particularly from technological progress, automation, and the digitization of services, are expected to remain dominant over the long term, but they are increasingly being punctuated by short, sharp episodes of inflation driven by supply shocks associated with geopolitical tensions, green transition costs, and policy uncertainty.In it weekly commentary, QNB pointed that global economy is no longer anchored in a stable inflationary or deflationary regime, but rather navigating a new era marked by structural volatility.According to QNB, prices changes of key baskets of goods and services are some of the most closely watched metrics in macroeconomics, alongside economic growth. They are crucial indicators of economic health, affecting everything from purchasing power and household confidence to investment decisions and monetary policy.While some level of price appreciation (inflation) is a normal and even desirable feature of a growing economy, both excessive inflation and outright price declines (deflation) can cause significant distortions and long-lasting damage, QNB said.Moderate inflation, like the one observed during the period of the so-called Great Moderation (1990-2007) in most advanced economies, typically reflects a vibrant economy that delivers well balanced growth. However, when inflation becomes excessive and persistent, it erodes real incomes, compresses profit margins, and destabilizes financial markets. It also compels central banks to respond with aggressive policy tightening, which can trigger recessions or financial stress, The Bank added.Conversely, deflation, the sustained decline in the general price level or much lower than normal inflation, is often a symptom of deeper structural weakness, such as depressed demand, financial deleveraging, or demographic stagnation, QNB noted.Falling prices may appear positive on the surface, but they can discourage consumption, delay investment, increase real debt burdens, and trap economies in a vicious cycle of low growth and weak confidence, it added.QNB cited Japan's experience in the 1990s and early 2000s as a cautionary tale of the long-term consequences of entrenched deflation, pointing that the same is also true for other major economies following the Great Financial Crisis in 2007-08.Relatedly, the bank noted, following a period when pandemic-related supply side shocks triggered much higher than normal inflation, there is little consensus on whether inflation or deflation are going to be major driving forces over the medium- or longer-term.The weekly commentary pointed that some analysts highlight that one of the key reasons inflation has re-emerged as a central economic concern lies in the unravelling of several structural forces that underpinned the "Great Moderation."During that time, a confluence of factors helped supress price pressures and stabilize macroeconomic volatility: deepening globalization fostered cheaper imports and offshoring; relative geopolitical stability ensured open trade routes and capital flows; supply chain integration enabled just-in-time production with minimal inventory costs; and the rise of rational, technocratic politicians and government officials who contributed to anchor economic expectations through credible policies and transparency, QNB said.The Covid pandemic exposed the fragility of over-optimized supply chains, prompting a shift toward reshoring and redundancy that carries higher cost structure, it added.Combined with demographic pressures (less people working to sustain more people not working), green transition costs, and strategic competition over critical technologies, these reversals support the argument of some analysts about a more inflation-prone environment ahead, in which price stability can no longer be taken for granted, the bank added.On the other hand, many analysts argue that it would be a mistake to assume that the post-Covid and Ukraine War era is uniformly inflationary. Powerful disinflationary forces are at play and accelerating, particularly those rooted in technological innovation.QNB considered that some geopolitical developments commonly viewed as inflationary - such as trade fragmentation - may actually have deflationary consequences under certain conditions.

A newly-acquired Bain Capital company in Japan that makes airplane seats, toilets and galleys is betting its US-based manufacturing hub will give it an advantage under President Donald Trump’s tariff regime.Armed with private equity cash, Jamco Corp’s new management is rebooting its aircraft seat business, chasing market share from rivals RTX Corp’s Collins Aerospace and France’s Safran SA, Executive Chair Kate Schaefer said in an interview.Supply chain issues that have seen wait times for cabin fittings blow out to as long as three years — forcing the likes of Delta Air Lines Inc and American Airlines Group Inc to ground newly delivered jets as they await seats — also present an opportunity to fill, Schaefer said.“Right now with everything that’s going on with tariffs, it appears to be an advantage in manufacturing and assembling these seats in the US,” she said. The company is also promising to deliver products in as little as six months.Jamco’s main production line is located near Boeing’s largest assembly line in Everett, just outside Seattle. The US has rolled out a raft of tariffs on global trading partners, with Japanese and European Union goods being levied at 15%, and up to 25% for India and 39% for Switzerland.Across the industry, carriers from Singapore Airlines Ltd to British Airways are spending hundreds of millions of dollars revamping seats as they upgrade cabins to lure more high-end travellers. Jamco plans to focus on higher-margin first-class and business seats, which can cost from $80,000 to $160,000 each depending on materials used and the level of customisation required.Jamco’s seat-making business struggled during Covid as global travel bans and border closures hammered the aviation industry. It paused research and development during the pandemic, but is restarting that under new management. Schaefer said the business has a slim orderbook but a factory and a workforce ready to go.Previously, Jamco counted the likes of Singapore Air and Dutch carrier KLM as top customers for its seats. Its other business units continue to make components and equipment like galleys for Boeing Co and Airbus SE jets.Jamco was bought by Bain in a $700mn buyout earlier this year. Like Virgin Australia Holdings Ltd., which delivered Bain a 3.5 times’ return on its initial investment when it listed the airline in June, the private equity firm says it aims to pursue an initial public offering of Jamco in a five-year timeframe. Bain is also actively looking for smaller complementary acquisitions to expand on Jamco’s current line of work.Bain’s Tokyo-based leadership who led the deal, Masa Suekane and Nick Gattas, sees Jamco as a “bet on the industry,” bolstered by the decade-long waitlist for new planes. Jamco aims to take advantage of the challenging ramp-up in widebody production by Boeing and Airbus as an “attractive” five-year window to win new business.

When her husband was arrested in an immigration raid near Los Angeles last month, “Martha” was abruptly separated from the father of her two daughters.She also lost the salary that allowed her to keep a roof over their heads."He's the pillar of the family... he was the only one working," said the undocumented woman, using a pseudonym for fear of reprisals. "He's no longer here to help us, to support me and my daughters."Los Angeles, where one-third of residents are immigrants – and several hundred thousand people are undocumented – has been destabilised by intensifying Immigration and Customs Enforcement (ICE) raids under the Trump administration.Since returning to power, US President Donald Trump has delivered on promises to launch a wide-ranging deportation drive, targeting undocumented migrants but also ensnaring many others in its net.After her husband's arrest, 39-year-old Martha has joined the ranks of people barely managing to avoid ending up on the streets of Los Angeles County – a region with prohibitively high housing prices, and the largest number of homeless people in the United States outside New York.Her 700sq-foot apartment in Buena Park, a suburb of the California metropolis, costs $2,050 per month.After her husband's arrest, she urgently found a minimum-wage night job in a factory to cover their most pressing needs.It pays just enough to keep them afloat, but has left Martha unable to cover a range of obligations."I have to pay car insurance, phone, rent, and their expenses," she said, pointing to her six- and seven-year-old daughters, who need school supplies for the new academic year. "That's a lot of expenses."How long can she keep up this punishing schedule, which allows her barely three hours of sleep on returning from the factory before having to wake and look after her daughters?"I couldn't tell you," she said, staring blankly into space.Los Angeles has seen some of the worst of the ICE raids.Squads of masked agents have targeted hardware stores, car washes and bus stops, arresting more than 2,200 people in June.About 60% of these had no prior criminal records, according to internal ICE documents analysed by AFP.Trump's anti-immigration offensive is taking an added toll on Latino workers, who were already among the worst-affected victims of the region's housing crisis, said Andrea Gonzalez, deputy director of the CLEAN Carwash Workers Centre, a labour rights non-profit."A bigger storm is brewing. It's not just about the people that got picked up, it's about the people that are left behind as well," she said. "There is a concern that people are going to end up on the streets."Her organisation is helping more than 300 struggling households whose incomes have plummeted, either because a family member has been arrested or because they are too afraid to return to work.It has distributed more than $30,000 to help around 20 families who are unable to afford their rent, but covering everyone's needs is simply "not sustainable," said Gonzalez.Local Democratic Party leaders are trying to establish financial aid for affected families.Los Angeles County is planning a dedicated fund to tackle the problem, and city officials will also launch a fund using philanthropic donations rather than taxpayer money.Some families should receive "a couple hundred" dollars, Mayor Karen Bass said last month.However, for Gonzalez, these initiatives do not "even scratch the surface" of what is needed, representing less than 10% of most affected families' rent requirements.She called for a "moratorium on evictions" similar to one introduced during the early days of the coronavirus (Covid-19) pandemic.Otherwise, Los Angeles' homeless population – currently numbered at 72,000, which is down slightly in the past two years – risks rising again, she warned."What we're living through right now is an emergency," said Gonzalez.Maria Martinez's undocumented immigrant husband was arrested in June at a carwash in Pomona, a suburb east of Los Angeles.Since then, the 59-year-old has had to rely on help from her children to pay her $1,800 monthly rent.Her $1,000 disability allowance falls far short."It is stressful," she said. "We're just getting by."

Top White House economic advisers have defended President Donald Trump's firing of the head of the Bureau of Labour Statistics (BLS), pushing back against criticism that Trump's action could undermine confidence in official US economic data.US Trade Representative Jamieson Greer told CBS that Trump had "real concerns" about the data, while Kevin Hassett, director of the National Economic Council, said the president "is right to call for new leadership”.Hassett said on Fox News that the main concern was Friday's BLS report of net downward revisions showing 258,000 fewer jobs had been created in May and June than previously reported.Trump accused BLS Commissioner Erika McEntarfer of faking the jobs numbers, without providing any evidence of data manipulation.The BLS compiles the closely watched employment report as well as consumer and producer price data.The BLS gave no reason for the revised data but noted "monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors”.McEntarfer responded to her abrupt dismissal on Friday in a post on the Bluesky social media platform, saying that it was "the honour of her life" to serve as BLS commissioner and praising the civil servants who work there.McEntarfer's firing added to growing concerns about the quality of US economic data published by the federal government and came on the heels of a raft of new US tariffs on dozens of trading partners, sending global stock markets tumbling as Trump presses ahead with plans to reorder the global economy."I think what we need is a fresh set of eyes at the BLS, somebody who can clean this thing up," Hassett said on *Fox News Sunday.In an interview with CBS's *Face the Nation, Greer acknowledged that there were always revisions of job numbers, "but sometimes you see these revisions go in really extreme ways”.Brian Moynihan, chief executive of the Bank of America, said that large revisions of economic data could undermine public confidence and that government officials should develop ways of improving data quality."They can get this data, I think, other ways and I think that's where the focus ought to be: how do we get the data to be more resilient and more predictable and more understandable?" he said on CBS. "Because what bounces around is restatements... that creates doubt about it."Critics, including former leaders of the BLS, slammed Trump's move and called on Congress to investigate McEntarfer's removal, saying that it would shake trust in a respected statistical agency."It undermines credibility," said William Beach, a former BLS commissioner and co-chair of the group Friends of the BLS."There is no way for a commissioner to rig the jobs numbers," he said. "Every year we've revised the numbers. When I was commissioner, we had a 500,000 job revision during President Trump's first term," he said on CNN's *State of the Union."And why do we do that? Because firms are created or firms go out of business, and we don't really know that during the course of the year, until we reconcile against a real full count of all the businesses."Former Treasury secretary Larry Summers, who worked in both the Clinton and Obama administrations, also criticised McEntarfer's firing."This is a preposterous charge. These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals," Summers said on ABC's *This Week.The BLS surveys 121,000 employers – businesses and government agencies – each month, seeking their total payroll employment during the week in which the 12th day of the month falls.The response rate has fallen sharply over the last several years since the coronavirus (Covid-19) pandemic, from 80.3% in October 2020 to about 67.1% in July.Knowing that, the BLS allows late-arriving employer submissions, and revisions to earlier submissions, to be taken into account over the next two months.That means each month's initial estimate of employment for the immediately preceding month also contains revisions to the two months before that as well, because by the third month the response rate has typically climbed to around 92%.The revisions in Friday's report were, however, large by historic standards.The downward revision of 125,000 jobs for May was the largest between a second estimate and third estimate since a 492,000 reduction for March 2020, which was the largest ever and was reported in June 2020 for the payrolls report for May 2020.Aside from that revision, Friday's revision for May was the largest for a change from the second estimate to the third estimate since a 127,000 job downward revision in March 1983, according to BLS data.