Fast forward to a new globalisation

Economic & geopolitical factors are rapidly reshaping globalisation, creating substantial new challenges as well as growth opportunities

This week’s IMF World Economic Outlook reported that the global economic outlook over the next several years is as weak as it has been for a few decades.  But the global economy is showing resilience against a range of headwinds and shocks, notably higher interest rates.  And global growth is expected to pick up gradually from next year, in both advanced economies and emerging markets.

There are risks ahead, particularly relating to the impact of higher rates on the financial sector.  The IMF Chief Economist noted that ‘We are therefore entering a tricky phase during which economic growth remains lackluster by historical standards, financial risks have risen, yet inflation has not yet decisively turned the corner’.  Regular readers will know my view that this context will constrain further increases in rates, and that policy-makers will tolerate above target inflation for longer.

Beyond this near-term outlook, my key takeaway from the IMF reports (as well as from the WTO and others) is …