Summary of the Chief Economists June Roundtable

Inflationary trends across the world and its effects on SMEs

Summary of the Chief Economists COVID-19 June Roundtable

The Montreal Group’s Chief Economists welcomed a new European member: Philippe Donnay, Commissioner of the Federal Planning Bureau, and representative of SOWALFIN Group to the roundtables. The meeting focused on grasping out the inflationary trends across the world, and its effects on the SME space, particularly as they relate to the interest rates, business expansion and borrowing capacity of entrepreneurs.


Here is a summary of the main comments shared by the Chief Economists:

    • (CANADA) Pierre Cléroux, BDC: Canada’s inflation is higher than the target set by the central bank (3.6% compared to 1-3%). This situation could force interest rates to increase, but they believe it might be temporal. Entrepreneurs are worried about this situation and about the increase in inputs’ price.
    • (JAPAN) Hikaru Fukanuma, JFC: There is no evidence of increase in consumers’ price. Interest rates are on average low. In some SME sectors, there has been a depression of commodities like fish and beef. To solve the problems caused by this situation on fishermen and farmers, many of them are exploring to use the internet to deliver their products directly to consumers.
    • (FRANCE) Baptiste Thornary, Bpifrance: Global inflationary pressure is low and mostly sectoral, raising the concern of those SMEs working with foods, energy, raw and industrial materials. Easing restrictions have increased optimism for the recovery of the service and construction spheres. The impact of inflation on SMEs is not as important as thought: only 6 to 7% of SMEs would face difficulties linked to a simultaneous debt increase and cash decrease (can explain the good momentum in investment).
    • (MOROCCO) Abdelmoumen Abdelmoughite, CCG: to boost tourism, a promotional campaign was deployed through reduced airline fares. Vaccinated people (virtually all those aged 40 and over) can travel anywhere. Inflation is expected to be 0.9 for 2021 and 1.2 for 2022. This means that SMEs are in a good place to get a medium and long-term loan, because interest levels are low for them.
    • (BRAZIL) Fabio Giambiagi, BNDES: inflation is at 3%, compared to a target of 3.75% with a cap of 5.75%. Inflation will be very high in 2021, (around 6.4%) and possibly will decrease (to 3.5%) for 2022, depending on arising political risks. This means that political tensions related to the upcoming electoral year, could have an impact on exchange rates and inflation. 
    • (SAUDI ARABIA) Hisham Al-Hasan, SIDF: according to Saudi Arabia’s General Authority for Statistics, the consumer price index (CPI) for May 2021 increased by 5.7% (compared to May 2020) and remained relatively stable to April 2021 (increasing by only 0.2%). The increase in year-over-year inflation is mainly attributed to the impact of increasing the value-added tax from 5% to 15% in July 2020 and the higher prices of Food and Beverages and Transport. Looking forward, the IMF (World Economic Outlook, April 2021) expects stable inflation in the next five years.
    • (BELGIUM) Philippe Donnay, SOWALFIN: there is a 1% inflation, which is below the 2 target (set by the European Central Bank). Belgium has the capacity to increase inflation, because of the services sector. A lack of competition could bring down inflation.

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