Despite everything that has been thrown at the global economy, it remains remarkably hardy. The Iran war is extracting a modest toll, higher interest rates don’t appear to have slowed growth so far and AI is driving an investment boom.
But there are limits to the staying power of the growth for which the International Monetary Fund just updated its forecasts. Luck — and reading the right signals from markets — will play a role.
The expansion isn’t flawless: The sharp climb in energy prices is causing hardship, extreme weather is forcing up commodity prices and some policymakers worry about excess spending on technologies vital for data centers. Nor is it churlish to contemplate what comes next. Will the inevitable slowdown be mild, as occurred after the dot.com collapse in 2001, or deeper, like the period that followed the failure of Lehman Brothers Holdings in 2008 or the shutdowns in response to COVID-19.
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