The Year Ahead
Bye-Bye, Stimulus: Where Budget Cuts Threaten Growth Around the World
A pivot away from government intervention will weigh on some economies, while others shrug it off.
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The world economy bounced back from the Covid-19 slump faster than most forecasters reckoned was possible a year ago—thanks largely to record injections of government money. Now those aid programs are getting trimmed or wound down.
What that means for global growth is one of the key questions for 2022. Financial markets are fixated on how fast central banks will raise interest rates to counter surging inflation. But how governments adjust their budgets will likely have a bigger impact on economies than anything monetary authorities do, at least in the developed world.