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Foreign Aid Is at a Record Peak, But Is It Enough?

Source: Organization for Economic Co-operation and Development (OECD)

Foreign aid rose to an all-time high of $161.2 billion last year, a 3.5% increase from 2019. In many cases, larger economies directed these funds to countries in need of significant help to respond to the short-term impacts from the COVID-19 pandemic, according to the OECD. 

An OECD survey shows that the foreign aid supported health systems, humanitarian aid and food security. However, OECD Secretary-General Angel Gurría added that there will need to be “a much greater effort to help developing countries with vaccine distribution … to build a truly global recovery.” 

Internationally, governments approved $16 trillion worth of COVID-19 stimulus measures, but only 1% was used to help developing countries handle the virus. Trade, foreign direct investment and remittances in developing countries have also declined as a result of the pandemic, intensifying their need for support.

U.S. Fed Hikes Interest Rates By 0.75%

Source: Reuters

The U.S. Federal Reserve has increased interest rates by 0.75% points for the second consecutive time in an effort to check inflation from its four-decade high. The hike raises the Fed’s policy rate to a range of 2.25 to 2.5% from near-zero in March — one of the fastest monetary policy changes in U.S. history. Stocks and bonds rallied after the Fed announced its rate hike on Wednesday.

Inflation is rising around the world, as Russia’s invasion of Ukraine and the pandemic raise the prices of food and energy. In the U.S., inflation hit an annual rate of more than 9% in June. Federal Reserve Chairman Jerome Powell acknowledged that economic growth has slowed as high prices cut into consumer discretionary spending.

The rate hikes come as some experts predict a potential recession. But the Fed doesn’t see an economic downturn on the horizon, in part because employers added 2.7 million jobs in the first half of this year. “I do not think that the U.S. is currently in a recession,” said Powell, adding that too many areas of the economy are doing well.

Europe Braces for Russian Gas Cutoff


Europe is bracing for a significant reduction of its main source of energy from Russia, which is angry at European sanctions. This week, Russia resumed operations for Europe’s main natural gas pipeline, but only at one-fifth of the pipeline’s normal flow.

Several EU countries, notably Germany, the Czech Republic and Slovakia, are highly dependent on Russian gas. In response, EU energy ministers (with the exception of Hungary) agreed to a voluntary 15% reduction in gas usage over this winter. 

The EU spent roughly $105 billion on Russian energy imports last year. The EU’s sanctions against Russia, in response to its invasion of Ukraine, will ban about two-thirds of Russian oil imports.

Heat Waves Grip the Globe

Source: Joshua Stevens/NASA Earth Observatory

Global warming is causing a ripple of extreme heat waves around the world, including in Europe, North Africa, the Middle East, and Asia, according to NASA’s Earth Observatory. In some regions, temperatures have risen above 104 degrees Fahrenheit (40 degrees Celsius), breaking world records.

In Europe, the heat caused wildfires across Portugal, Spain, and parts of France. The U.K. also experienced record temperatures this week that reached 104 degrees Fahrenheit (40 degrees Celsius). In May, deadly heat waves engulfed India and Pakistan and caused India to ban wheat exports.

Global warming is caused by greenhouse gas emissions, which climbed by a record 6.4% in 2021. “This large area of extreme (and record-breaking) heat is another clear indicator that emissions of greenhouse gases by human activity are causing weather extremes that impact our living conditions,” said Steven Pawson, chief of the Global Modeling and Assimilation Office at NASA Goddard Space Flight Center.

Real Wages Fail to Keep Up As Inflation Bites

Real wages are falling, despite the pay hikes over the past three years. While nominal wages have increased 9% in the U.S. since March 2019 off the back of a hot labor market, when paired with the impacts of the pandemic and inflation of 8.6%, real incomes are down by 1%. 

For employers, recession and inflation leave little room for continued wage hikes. Yet, companies are scrambling to fill vacancies. Job openings still outnumber the number of people looking for work by almost two to one, according to U.S. jobs data. 

To attract and retain workers, employers need to cater to the changed needs and demands of the post-pandemic workforce. More than eight in 10 employees said they would forgo a pay increase in return for other benefits — the top benefit being more control over their work schedule, according to a Mercer study. 

More well-being benefits and the ability to work from anywhere were also highly desired. Companies in the U.K. are experimenting with a four-day work week, and employers putting programs in place to support caregivers show how firms are trying to respond to a broader set of employee needs to remain competitive in the talent market. 

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