Glossary

The return an investor earns for lending money to a government or company by buying its bonds. When yields rise, borrowing across the economy tends to get more expensive.

The institution that manages a country's money supply and interest rates — like the Federal Reserve or European Central Bank — usually with a mandate to keep prices stable.

A narrow passage — a canal or strait — through which a large share of world trade or energy must pass. Disruption there ripples quickly through global prices.

The idea that countries gain by specialising in what they produce relatively most efficiently and trading for the rest, even if one country is better at everything.

When a central bank buys or sells its own currency to influence the exchange rate — often to slow a sharp fall by spending foreign reserves.

The economic boost a country gets when its working-age population is large relative to its dependants — young and old. More workers, fewer mouths to feed, faster growth — but only if jobs and institutions are ready for the surge.

When a resource boom lifts a country's currency and wages so much that its other industries can no longer compete abroad, hollowing out the wider economy.

Using economic tools — tariffs, sanctions, export controls — to pursue foreign-policy goals rather than purely commercial ones.

A general rise in prices over time, which erodes the purchasing power of money. Central banks typically aim for around 2% a year.

A country that buys more food from abroad than it produces, leaving it exposed when global food prices rise.

A currency, above all the US dollar, that the world holds and uses to price trade — giving the issuing country cheap borrowing and global influence.

The extra return investors demand for taking on riskier assets instead of a safe one like a government bond. A rising risk premium signals worry; a falling one signals confidence.

An asset like gold or US Treasuries that investors buy in uncertain times because it tends to hold value when riskier assets fall.

A state-owned investment fund, often built from oil or gas revenue, that invests globally to turn a finite resource into lasting national wealth.

A stockpile — of oil, grain or minerals — that a government builds in good times and releases during a shock to steady supply and prices.

A sudden change in the cost or availability of producing goods — a war, a drought, a blocked canal — that pushes prices up even without a rise in demand.

A tax on imported goods. It can protect local industries but raises prices for buyers and often invites retaliation from trading partners.

The ratio of the prices a country gets for its exports to the prices it pays for its imports. Better terms of trade mean it can buy more abroad for the same exports.