A darkening economic outlook
Factories are slumping, many businesses are paralysed, global growth is sputtering and the world’s two mightiest economies are in the grip of a dangerous trade war. Barely a year after most of the world’s major countries were enjoying an unusual moment of shared prosperity, the global economy may be at risk of returning to the rut it tumbled into after the financial crisis of 2007-2009. Worse, solutions seem far from obvious. Central banks can’t just slash interest rates. Rates are already ultra-low. And even if they did, the central banks would risk robbing themselves of the ammunition they would need later to fight a recession. High government debts make it politically problematic to cut taxes or pour money into new bridges, roads, and other public works projects. “Our tools for fighting recession are no doubt more limited (than) in the past,” said Karen Dynan, an economist at Harvard University’s Kennedy School. The International Monetary Fund (IMF) and the World Bank have dow