LONDON, Dec. 12 (Xinhua) -- The era of deflationary pressures in the global economy is coming to a close, top economist Jim O'Neill told Xinhua in a recent exclusive interview.
O'Neill is the creator of the BRIC nations acronym -- Brazil, Russia, India, China -- to describe the emerging markets which he identified at the beginning of this century as future engines for world growth. South Africa has since been added to the group.
There are three or four elements combining now to mark the end of a low-inflation period, in O'Neill's view.
These are: a wave of populist politics putting leaders in power who may seek to boost the wages of some workers; the continued loose monetary policy, which remains at historically low levels even eight years after the financial crisis; an international move towards fiscal expansion; and an upturn in commodity prices.
In the United States, the election of Donald Trump as president will also increase the anticipation from workers who look to him to deliver better wages, said O'Neill.
According to O'Neill, who is the former chief economist at Goldman Sachs and was, until very recently, a British government minister, inequality has not truly increased.
"It is not true on accepted conventional measures, such as the Gini Coefficient. It is not true that inequality has widened in the UK," said O'Neill.
"Compared to 20 years ago, inequality is slightly lower in the UK, because the higher income earners... have suffered more than lower earners, so inequality has declined. But many people choose to either ignore that or deny it," he explained.
It was not income that united pro-Brexit voters and Trump supporters in the United States, but other factors, he noted.
"If you look closely at the evidence of the Brexit vote the biggest commonality was age and the color of people's skin, not income gap," O'Neill said.
And the economist expects the current political climate worldwide will have a knock-on effect on inflation, citing the increasing tendency of wages boost for workers by policymakers.
But it is a challenge for Trump to deliver. "A lot of people in Ohio and Pennsylvania genuinely believed Donald Trump will be able to create new steel factories. That will be an interesting exercise for him to do," said the chief economist.
The current very low bank rates among developed economies may also have an impact on inflation tied with the fiscal policies of nation states.
"Despite the high levels of debt, we are now shifting to more fiscal expansion in many countries. And...it looks to me like commodity prices have turned upwards," said O'Neill.
O'Neill commented: "If you put all those things together it looks like global deflationary pressures are at the beginning of the end."
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