The world economy’s inflation problem is easing
But recession is still likely
After three chaotic years, investors have several reasons to be cheerful about the world economy. In America inflation is tumbling, raising hopes of a “soft landing”, in which price growth comes under control without a recession. Fortune has smiled on Europe, where a mostly warm winter has caused energy prices to plummet. And China’s economy, freed from Xi Jinping’s destructive “zero-covid” policy, is poised to rebound. Markets are joyous. The S&P 500 index of American stocks has risen by 5% since the start of the year. Share prices in Europe and emerging markets are up by even more.
This article appeared in the Leaders section of the print edition under the headline “Polycrisis or polyrecovery?”
From the January 28th 2023 edition
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