A Buoyant Global Economy Is Starting to Sag
The global economy’s brief run of good luck may be ending. Manufacturing activity is weakening across the world. Europe slid into a mild recession earlier this year.
China’s much-anticipated rebound from Covid-19 lockdowns is sputtering. Many emerging markets continue to struggle with heavy debt burdens and high interest rates. Still, central bankers and finance ministers from the Group of 20 major economies gathering in Gandhinagar, India, this week can in many ways breathe a sigh of relief.
Headline inflation is dropping. Labor markets in many countries remain strong. Many of the worst-case scenarios officials stressed about after Russia’s invasion of Ukraine last year—from a cascade of defaults across the developing world to a deep recession in Europe—haven’t come to pass.
The question now for the world’s top economic officials is whether they can keep dodging the worst consequences of the threats they face, from restrictive monetary policy to a slowdown in global trade. “While prospects are mixed in the near term, the medium-term outlook for the global economy remains bleak," said Kristalina Georgieva, the managing director of the International Monetary Fund. China’s weakness looms large While economists polled by the Journal expect China to report around 7% in second-quarter growth on Monday, global officials are still closely watching the world’s second-largest economy.
Chinese exports last month were down precipitously from a year earlier, while consumer inflation is flat—a sign of weak demand that raises the risk of deflation. While central banks around the world increase interest rates, China’s has cut them in a bid to stimulate the economy. During a press conference on Sunday ahead of the G-20 meetings, U.S.
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