Economic observers should heed the warnings now – rising prices and slowing growth are a very real threat
How will the global economy and markets evolve over the next year? There are four scenarios that could follow the “mild stagflation” of the last few months.
The recovery in the first half of 2021 has given way recently to sharply slower growth and a surge of inflation well above the 2% target of central banks, owing to the effects of the Delta variant, supply bottlenecks in both goods and labour markets, and shortages of some commodities, intermediate inputs, final goods, and labour. Bond yields have fallen in the last few months and the recent equity-market correction has been modest so far, perhaps reflecting hopes that the mild stagflation will prove temporary.