Significantly rising energy prices are fueling fear of stagflation.
(Photo: dpa)
Car-free, fun while doing it – the older ones among us will still remember evening strolls on deserted main roads or long bike rides on the autobahn. These alternative excursions made possible the car-free Sundays in the 1970s.
Back then, doing without a car was not about ecology or climate change. The reason for the mobility brake was OPEC, which had turned off the oil tap for political reasons. The result: energy prices soared and economic growth collapsed. In short: there was stagflation. This mixture of rising prices and sclerotic growth is so dangerous because it is very difficult to get around with the tools of the central banks.
Recently, the ugly word has appeared more and more often when it comes to justifying the more violent fluctuations on the capital markets. In fact, a new stagflation cannot be ruled out at the moment. But it is not likely – at least if the term is used to mean a horror scenario like in the 1970s.
The discussion was triggered by the global economic situation after the corona crisis. Employment is still a long way from pre-pandemic levels, repairing global supply chains is taking longer than many expected, and energy prices are rising massively – at the same time, the US Federal Reserve is sending signals that the end of the ultra-loose monetary policy is approaching.
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The upswing is not over
This mix actually doesn’t look too friendly. On the other hand, it would be naive to believe that the global economy will simply find its way back to its old rhythm within a few months after such a brutal shock as the pandemic, especially since the delta variant has postponed the hoped-for economic recovery.
However, this does not stop the upturn. In its new outlook on the world economy, the International Monetary Fund speaks of more stubborn upheavals due to the corona crisis. Nevertheless, economists are still assuming growth of 5.9 percent for this year and 4.9 percent for 2022. That is still a very long way from the plight of the 1970s, when the world economy contracted and unemployment was massively higher than it is today.
There will be no car-free Sundays again anytime soon. Unless the pandemic situation surprisingly worsened significantly.
More: The higher inflation is welcome – and necessary for the transformation of the German economy