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Supply shocks generate larger increases in inflation and bigger falls in output when wages are rigid.
"Small falls in output across a range of sectors also contributed to a drop in overall manufacturing".
A slight pickup in activity in March was not enough to offset sharp falls in output earlier in 2016 and meant production dropped for the second successive quarter – the definition of a recession.
It says that countries such as Russia suffered from the "shock therapy" administered as a result of IMF advice, and that countries such as Brazil and Argentina have grown more strongly after abandoning "failed policies" – for example the fixed exchange rate policies that led to sharp falls in output.
All the major economies of the OECD – the US, Japan, Germany, France, Italy and the UK – have already reported falls in output at the end of 2012, with the thinktank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%.
All the major economies of the OECD - the US, Japan, Germany, France, Italy and the UK - have already reported falls in output at the end of 2012, with the think tank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%.
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Most aggregates show an irregular evolution; for instance, North America is seen to rise and fall in output.
"On a more positive note, the very sharp falls in industrial output in Sweden have entailed a significant drawdown of inventories," said Varun Bhabha, an analyst at Barclays Capital.
Of the 54 countries tracked by The Economist to calculate our measure of world GDP (which collectively account for 90% of global output), half saw their growth rates fall; in seven output fell.
The eurozone manufacturing PMI came in at 46.1, showing another fall in output (see 9.07am).
Is it Greece, where the 20% fall in output is of Great Depression proportions?
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