From America’s sweeping revision of trade deals to Yemen’s currency, to Africa’s fight against an invasive pest – these are the stories that matter in world economy this month.

Global trade rebounds despite uncertainty over American policy

The second quarter of 2017 saw global trade expand at the fastest annual rate in six years. Stronger growth in some developed and emerging economies, stable global commodity prices and an improved business confidence all contributed to the rebound. These solid indicators emerged despite uncertainty over the future shape of international trade policies, particularly the sweeping review of trade deals currently undertaken by the US. The Trump Administration has already pulled out of the Trans-Pacific Partnership (TPP) and started to renegotiate the North American Free Trade Agreement (NAFTA). The review of trade accords is a chance to improve transparency and boost environmental and labour considerations, but the risks of new trade barriers and disruption of cross-border production chains loom large. Read more

One island, two fates – Haiti and the Dominican Republic

Despite sharing the same Caribbean island of Hispaniola, the economic fortunes of the Dominican Republic and Haiti could not be more different – and they will continue to diverge through the end of this year. The former remains one of the region’s fastest growing economies, with a GDP growth projection of 5 per cent for 2017, strong inflow of remittances, a buoyant tourism sector and robust growth in investment and exports. Haiti, on the other hand, continues with sluggish economic growth, coupled with high inflation. Its per-capita income – the region’s lowest, by far – is expected to stagnate in 2017, amid long-standing institutional barriers, severe macroeconomic imbalances and struggles with the aftermath of natural disasters, including Hurricane Matthew and the 2015-2016 drought. Read more

Fall armyworm munches away at African agricultural sector

The highly invasive fall armyworm, native to the Americas, continues to wreak havoc on African smallholder farms. Ever since its discovery on the continent in early 2016, the infestation has spread widely, causing significant economic losses to smallholder farmers. The situation is especially dire in the poorest countries, where agriculture is an important part of the economy and where the use of pesticides is financially challenging. Read more

Yemen’s Central Bank floats currency amid armed conflict, crumbling institutions

On 15 August, the Central Bank of war-torn Yemen announced it had floated the national currency. As a result, the Yemini riyal quickly lost value, from 250 to 370 riyals per US dollar, narrowing the gap between the official and the “black market” rates. While this decision may help Yemen to stem the loss of foreign reserves – badly needed to import food, energy and other goods – it may also increase the already high inflationary pressures. Yemen’s crumbling institutional infrastructure has exacerbated the humanitarian crisis, as seen in the ongoing cholera epidemic, which has infected half a million people since its outbreak in April. Read more

Related information: World Economic Situation and Prospects September 2017 Briefing