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From Venezuela’s economic woes to Saudi Arabia’s deflation, UN DESA’s experts present the latest state of the global economy in the August edition of the World Economic Situation and Prospects (WESP) Monthly Briefing.

Venezuela remains mired in deep economic crisis

Amid ongoing political turmoil, the Bolivarian Republic of Venezuela remains mired in a deep and prolonged economic crisis. Official data on GDP growth, inflation and other key macroeconomic variables are scarce, but latest estimates show that the country’s economy is contracting at a double-digit rate. The International Monetary Fund (IMF) recently revised downwards its?2016?GDP growth estimate for Venezuela to -18 per cent. With oil prices expected to remain subdued, and massive structural imbalances persisting, Venezuela’s economy is expected to experience further contraction in 2017.?

Weak demand for steel impacts jobs in the US

The global decline in steel prices from mid-2014 has put severe pressure on US firm profitability, contributing to the loss of 15,000 jobs in the iron and steel sectors since January 2015. While global steel prices have rebounded over the last 18?months and now stand close to early 2014 levels, stronger global investment growth is needed for steel demand to pick up substantially. A presidential memorandum in April 2017 called for an investigation into whether steel imports threaten national security. Should the report—due by early 2018—confirm this assumption, tariffs on steel imports and other actions may be imposed.?

Russian economy continues to adapt to prolonged sanctions environment

In early August, the United States expanded economic sanctions against the Russian Federation, targeting the energy and finance sectors, as well as several state-run companies in the metal, mining and railway sectors. Yet, indicators show that the Russian economy has largely adapted to the prolonged sanctions environment, and the new US measures did not materially impact the stock market and exchange rate. Initial estimates by the central bank show that the economy expanded?by 1.3-1.5 per cent in the first half of 2017.?

China tackles financial risks to its economy

Despite high uncertainty in the international environment, recent indicators reinforce the steady growth outlook for the Chinese economy, which expanded at a sustained 6.9 per cent in the second quarter. However, China faces a potential systemic risk from elevated corporate debt. In?2016, the country’s corporate debt level of over 160 per cent of GDP was the highest among major emerging economies, according to the Bank for International Settlements. In July, Chinese authorities doubled down on their commitment to address the growing financial vulnerabilities. The policy makers now face a difficult balancing act of tackling financial risks to ensure medium-term growth, while maintaining the economy’s momentum in the short term.?

Saudi Arabia faces deflation

In the first quarter of 2017, Saudi Arabia’s economy contracted by 0.5 per cent on a year-on-year basis, as the country cut its crude oil production under the agreement of the Organization of the Petroleum Exporting Countries (OPEC). The general price level in Saudi Arabia has been on a deflationary trend since early this year. In June, consumer prices declined by 0.4 per cent, due in part to the waning impact of subsidy cuts which drove up prices in 2016. With Saudi Arabia’s national currency pegged to the US dollar, the space for countering deflationary pressures with monetary policy is limited. Moreover, the country’s government, committed to economic reform, is expected to maintain lower spending levels, potentially extending the deflationary pressures through the second half of 2017.?