Read more about the article Whither the U.S. Fiscal and Trade Deficits

Whither the U.S. Fiscal and Trade Deficits

Thanks to the AI investment boom, the U.S. economy has performed well at the macroeconomic level. However, it is on an unsustainable fiscal and debt path. Mr. Trump’s fiscal policy in his second term has aggravated this trajectory. In turn, Mr. Trump’s tariff-based trade policy has failed to address what he sees as U.S. economic problems associated with the trade balance. Besides explaining why this has been the case, and what its implications are for the U.S. economy and the rest of the world, this policy paper addresses what it would take for the U.S. to reverse both its fiscal position and the erosion of confidence in the U.S. as a global trading partner.

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Read more about the article Global Imbalances and Geopolitical Fragmentation

Global Imbalances and Geopolitical Fragmentation

Global imbalances are back — and this time the risks look different. The 2008 financial crisis showed how persistent current account deficits and surpluses between major economies can fuel financial instability and trigger sudden, severe reversals of capital flows. After almost two decades, many thought that episode had been resolved. It had not. New imbalances have built up, with a familiar cast: China, Germany, Japan, and oil exporters running large surpluses and the United States absorbing the rest of the world's savings. But the underlying dynamics have shifted in ways that make the current situation harder to read — and potentially harder to unwind. This paper traces those shifts and asks whether the world is better or worse placed to manage them this time around. The situation today is not simply the result of trade imbalances or unfair competition. It reflects the structural role of the United States as the world's balance-sheet absorber of last resort — a country whose assets everyone wants to hold, regardless of what tariffs or exchange rates do. That role comes with new vulnerabilities: persistent global demand for dollar-denominated safe assets, soaring public U.S. debt, equity markets concentrated in a handful of technology firms, and a financial system increasingly reliant on non-bank intermediaries. Fixing this would require coordinated action — fiscal adjustment in the United States, stronger domestic demand in China, deeper financial integration in Europe. What is missing is the political will to act, at a moment when geopolitical fragmentation and strategic rivalry make international cooperation harder than ever. The crisis of 2008 was not the last word on global imbalances. It may have been the rehearsal.

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Read more about the article The Hormuz Shock and South America’s Mineral Reckoning

The Hormuz Shock and South America’s Mineral Reckoning

The global economic shock triggered by the February 2026 closure of the Strait of Hormuz caused uneven effects on South America’s mineral economies. The disruption drove Brent Crude sharply higher and created a dual-edged outcome: stronger export revenues for oil and mineral producers, but much higher costs for imported energy, fertilizers, chemicals, and machinery. The balance varies by country, with Brazil facing especially acute fertilizer risks, Chile and Peru exposed to higher mining costs, and oil exporters such as Guyana and Colombia benefiting more directly. This paper argues that the crisis may also weaken global demand through stagflationary effects, limiting the commodity windfall. Long-term gains will depend on policy responses such as stabilization funds, supply diversification, strategic reserves, and greater value addition.

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Read more about the article Dire Strait of Hormuz: A Chokepoint for Global Food and Energy

Dire Strait of Hormuz: A Chokepoint for Global Food and Energy

The outbreak of conflict in the Middle East has triggered a multilayered shock to the global economy and financial markets. The severity of global consequences will depend on the duration of disruptions—particularly to the Strait of Hormuz—and the policy responses of governments and central banks. We address here the transmission channels through which conflict has affected global energy markets, commodity supply and prices, transportation systems, macroeconomic conditions, and financial markets. Rather than focusing only on oil and gas supply, we trace how the disruption in the Strait of Hormuz and related infrastructure has potentially propagated through shipping, aviation, food costs, remittances, inflation expectations, and central bank responses. Although short-term disruptions may produce volatility without structural transformation, prolonged conflict risks leading to stagflation, change of trade patterns, and reshaping global financial dynamics.

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Read more about the article Energy Transition: Is It Finally Happening?

Energy Transition: Is It Finally Happening?

Perhaps the question “Is it finally happening?” should be replaced by another: what economic, political, technological, and institutional conditions will be necessary for the energy transition to truly take place—and at the speed the planet demands? Because by all indications, the great energy dispute of the 21st century will no longer be merely about who produces energy. It will be about who can electrify, store, transmit, integrate, and control the energy systems of the future.

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Read more about the article Os desequilíbrios globais estão de volta

Os desequilíbrios globais estão de volta

Desequilíbrios globais voltaram ao centro do debate econômico internacional – e por razões robustas. Historicamente, grandes desequilíbrios externos estiveram associados a crises financeiras, volatilidade cambial, reversões abruptas de fluxos de capitais e tensões geopolíticas. No centro desse debate está a relação comercial e financeira entre EUA, China e o restante do mundo.

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Read more about the article Greening in the Wrong Places: Geography, Policy Distortions, and the Hidden Costs of Misallocated Green Investment

Greening in the Wrong Places: Geography, Policy Distortions, and the Hidden Costs of Misallocated Green Investment

Decarbonization is reconfiguring global relative prices. As clean energy, natural capital, and location-specific assets become dominant industrial inputs, the relative cost of producing low-carbon goods is increasingly determined by geography. Two systematic distortions explain why the expected reallocation of investment toward renewable-rich economies remains incomplete. First, industrial policy interventions, including subsidies, trade barriers, and certification systems, disconnect effective prices from underlying structural costs. Second, institutional failures create demand uncertainty that leaves structurally competitive projects unbankable. Together, these distortions generate static misallocation, leading to slower technological learning, higher fiscal burdens, delayed emissions reductions, and suppressed industrial opportunities in developing economies. This paper is part of broader research on powershoring and green comparative advantage, which focuses on the idea that decarbonization is a spatial and price reorganization of global production, in addition to a technological transition.

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Read more about the article The Productive Value of Care: Evidence from International Experience and Implications for Morocco

The Productive Value of Care: Evidence from International Experience and Implications for Morocco

Closing Morocco's gender employment gap could increase GDP per capita by 40-50 percent; yet female labor force participation stands at just 19 percent—among the lowest in the world and still declining. This policy paper argues that investing in the care economy is not merely a social expenditure, but a productive economic strategy with measurable returns. Drawing on international evidence from Uruguay, Mexico, Colombia, and India, the brief demonstrates that well-designed care systems—spanning childcare, eldercare, and domestic work—can substantially increase women's labor force participation, generate employment across sectors, improve human capital outcomes, and expand the fiscal base through workforce formalization. The paper identifies four operational pillars for reform: building a robust measurement infrastructure, including a satellite account for unpaid care work; expanding affordable, high-quality childcare, particularly for children under three; professionalizing and formalizing the care workforce; and strengthening governance through a centralized coordination body. Morocco's ongoing reform agenda—anchored in the New Development Model and the Jobs Roadmap—offers a timely opportunity to embed these investments within national policy.

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Read more about the article U.S., China, and Latin America: How Far Does the Donroe Doctrine Go?

U.S., China, and Latin America: How Far Does the Donroe Doctrine Go?

The commercial and geopolitical interdependence between China and Latin America makes any U.S. claim to promote a "decoupling" between them impractical. Digital technologies and critical minerals will be in the crosshairs of the North American National Security Strategy

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Read more about the article EUA, China e América Latina: até onde vai a Doutrina Donroe?

EUA, China e América Latina: até onde vai a Doutrina Donroe?

A interdependência comercial e geopolítica entre a China e a América Latina torna impraticável qualquer pretensão dos EUA de promover um "desacoplamento" entre elas. As tecnologias digitais e os minerais críticos estarão na mira da Estratégia de Segurança Nacional norte-americana

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Read more about the article Dire Strait of Hormuz: A Chokepoint for Global Food and Energy

Dire Strait of Hormuz: A Chokepoint for Global Food and Energy

The outbreak of conflict in the Middle East has triggered a multi-layered shock to the global economy and financial markets. The severity of global consequences will depend on the duration of disruptions—particularly to the Strait of Hormuz—and the policy responses of governments and central banks. We approach here the transmission channels through which conflict has affected global energy markets, commodity supply and prices, transportation systems, macroeconomic conditions, and financial markets. Rather than focusing only on oil and gas supply, we trace how the disruption in the Strait of Hormuz and related infrastructure has potentially propagated through shipping, aviation, food costs, remittances, inflation expectations, and central-bank responses. Although short-term disruptions may produce volatility without structural transformation, prolonged conflict risks leading to stagflation, change of trade patterns, and reshaping global financial dynamics.

Continue ReadingDire Strait of Hormuz: A Chokepoint for Global Food and Energy