Global Economy Faces Storm Despite Muddling Through IMF Meeting

Larry Elliott in the Guardian frames the absence of a 2008-style crisis as “something of a miracle” and “a crisis postponed,” not a crisis avoided—“a lull before the storm, in all probability.” He attributes still-robust growth and muted inflation to three buffers: massive AI investment (especially in the U.S.), drawdown of oil inventories, and cheap Chinese exports that “bear[] down on the prices of imports elsewhere.” He then catalogs flashpoints: a deteriorating Middle East, low oil stocks, Donald Trump having entered “just the sort of forever war that he used to rail against,” Chinese goods “threatening manufacturing jobs in the west, with Germany especially vulnerable,” AI crowding out capital for other sectors, and a clash between IMF/Bank of England calls to “run a tighter fiscal ship” and voters who “want politicians to do more, not less,” so that delivering “painful measures” would likely produce a “brutal” backlash. He argues globalization’s retreat meets a “moribund” WTO and an IMF and World Bank “reluctant to call Trump out,” but says hoping a new U.S. president will restore partnership “is for the birds” because the Bretton Woods institutions long ago lost their New Deal connection. Citing Richard Kozul-Wright, he says they have instead been “hand maidens to an age of rising inequality, debt distress and heightened anxiety,” with lending “strings attached” that front-load tax rises and spending cuts and define success as avoiding another program within three years, not rising living standards. He concludes that a return to those principles “has [no] chance of happening any time soon,” so “the world will become hotter, more fractured, more prone to conflict, less equal and a lot angrier.”