Economy 2021: a shocking year for the global economy

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In the last quarter of 2020, The Conversation published
Spain Welcome to the era of disorder.

In it, Professor Jorge Hernando Cunado of the University of Nebrija described some of the events that were to bring instability to the world order and the world economy.

It is clear that indeed chaos has been present on many levels during the year that now ends.

Energy and price

Spain started frigid 2021 because of storm Filomena. The unusual drop in temperatures caused an increase in energy demand which led to a sharp increase in electricity prices. At the time, it seemed somewhat circumstantial.

So, at the beginning of last year and because of the snow, we started to talk about one of the recurring themes of 2021: the prices of electricity.

Researchers Escamilla, Sanchez Martinez and Tilocca, from the University of Seville, explained to us in “Why does the price of electricity change so much in Spain? the factors that act on the Spanish energy market to set electricity prices.

Then, in the middle of the year, the government made changes to the calculation of the electricity bill that Professor Jose Luis Sancha of the Universidad Pontificia Comillas explained to us in the electricity bill on the free market. : do you overcharge my merchant?

And, in Myths around the price of electricity: should renewables be the only bet? , Professor Jose Guillermo Sanchez Leon (USAL) analyzed the management of the electricity market and the factors that could help (or not) to lower prices.

Gas is one of the main sources of energy for the production of electricity and this year many factors have influenced the rise in its prices.

Some go beyond economics and get mixed up with geopolitical reasons, as explained by Professor Luis Velasco, from the University of Malaga, in his article Geopolitics in the boiler: what about gas in Europe? .

Over the months, the cyclical imbalance seems more structural: what a year ago was paid at 39.51 / MWh is now paid at 358.06 / MWh.

Debt and inflation

The rising trend in global debt and the return of inflation after years of price suppression were other threats to the global economy at the end of 2020.

Today we know that global debt has reached levels never seen before. According to the latest update of the IMF database, in 2020 it reached 256% of world GDP (226 trillion dollars). And growing.

In line with this fact, in their article Public debt, odious debt and coronavirus: History lessons, the professors of economic history of the ULPGC Daniel Castillo Hidalgo and Sergio Ferri Solbes review some moments of history at the during which the public debt played an important role. weight.

At the end of the summer, Professor Francisco del Olmo Garcia of the University of Alcala explained how, during the new academic year, the development of prices should be closely monitored: “The fact that the rate inflation is positive is not so worrying as the speed at which it is reaching relatively high levels, ”he stressed. The truth is that in October and November they saw an annual increase of more than 5%, while in February of this year the percentage was 0%.

Reversing inflation, Professor Ruben Garrido-Yserte (UAH) analyzed in Storm clouds on the horizon: prices rise by 5.5% in the Spanish economic outlook, after the announcement by INE of the price increase in October. Since June 2008, similar figures have not been observed (it was then 5%).

These increases coincide with changes in the monetary strategy of the European Central Bank. Maria Nieves Garcia Santos (IE University) explains in The European Central Bank’s new monetary policy will allow periods of inflation that with the new inflation target of 2% in the medium term, there may be temporary differences.

This would help stabilize the inflation expectations of economic agents, an essential element for the proper functioning of financial markets.

Other lessons learned

This year, we discovered the importance of well-functioning supply chains to the good performance of the global economy.

Between March 23 and 29, the grounding of a mega-ship kept the Suez Canal closed, causing supply chains to paralyze and oil to rise.

From there, we learned about the enormous economic weight of the invisible shipping industry: a hyper-concentrated and therefore powerful sector, which displaces 80% of world trade.

In Transport by sea, a key element of the global logistics bottleneck, professors Rafael Villa and Tomas Martin (UCJC) explained the reasons for the logistics crisis and the characteristics of the sector.

On December 19, 2020, a bitcoin was worth 23,874.50 euros USD, on January 8 a bitcoin was already worth 40,675.80 USD and on December 19, 2021, 46,683.80 USD (on November 8 it reached the price record of 67 $ 582.60).

This shows us the extreme volatility (for the most diverse causes) of crypto-currencies, which are also extremely attractive to young people and must be regulated as soon as possible.

Labor and social rights

In 2021, we also talked about labor rights and social protection. What has been accomplished and what remains to be accomplished.

Pensions.

Emilio Jose Gonzalez Gonzalez (Comillas), Maria Gema Quintero (UC3M), Gayle Allard (IE University) and Santos Miguel Ruesga (UAM) analyzed the Spanish pension system and its shortcomings, the importance of social dialogue for its reform, for slowing down spending with options such as extending the retirement age, all in order to guarantee citizens economic sufficiency in their old age.

The interprofessional minimum wage.

The SMI ends the year at 965 euros, after the Council of Ministers approved an increase of 15 euros at the end of September. Roberto Fernandez (University of León) and Marta Fernandez (University of Vigo) explain the improvements brought by this increase, which seems rare, to the most vulnerable workers.

The minimum living income.

Spain closes 2021 after approving the Living Minimum Income Law, which began at the end of May 2020 as Royal Decree-Law 20/2020.

In May of this year, Professor Nuria Reche Tello (Miguel Hernandez University) analyzed the effects of the application of this measure after one year of its implementation.

For his part, Professor Henar Alvarez (University of León) analyzed the reasons that made it necessary to apply it as a tool for poverty reduction in Spain.

By defending its approval in Congress, the government indicates that “in this way the regulation concludes the parliamentary process, certifying the legal certainty of the regulation”.

And Professor Maria Garrote (UCM) talks about this right in her article Legal security: what is it and what is it for?

What remains to be done

We have also achieved what remains to be done to make work worthy in Spain.

Professor Belen Alonso-Olea (UNED) tells us about domestic employment, a sector that tends to be precarious and overwhelmed and in which one of the most vulnerable working groups seems to be working: migrant women.

Spain has not yet acceded to ILO Convention 189 for decent work in domestic employment, which proposes that working conditions should not be less favorable than those applied to other workers. This would finally give them access to unemployment benefits.

And also, we were waiting to tell how the dialogue between the government, the employers’ association and the unions for labor reform ended (Vanessa Izquierdo, University of Nebrija). Stories that will continue the year we are about to begin.

Syndicated by PTI, of The Conversation


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