Global Economic Risks Should Be Faced, Not Ignored
Economic and geopolitical threats are increasingly at odds with the apparent calm in financial markets.
What could possibly go wrong?
Photographer: Chung Sung-Jun/Getty Images
Last week, the world’s finance ministers and central bank governors assembled in Washington to discuss the global economy. With the pandemic and its effects receding, there was good news on inflation and growth. Yet as the International Monetary Fund’s briefings show, economic risks aren’t subsiding — and, not least in the US, political dysfunction is making things worse.
Efforts to curb inflation following the pandemic’s shocks to supply have broadly succeeded. Global inflation, which peaked at nearly 10% in 2022, is expected to fall to less than 4% by the end of next year, slightly below the pre-pandemic average. Given the severity of the initial upheaval, compounded by Russia’s war on Ukraine, disinflation caused smaller losses than once seemed likely, and moderate, steady growth has mostly resumed. The bad news is that economic and geopolitical risks are increasingly at odds with the apparent calm in financial markets.