04/28/2023 –

In April, the global economy proved its resilience once again, despite stubborn inflation and soaring interest rates. This was boosted by a steadfastly robust labor market. China’s growth has been stronger than expected in the first quarter, pulling emerging Asian economies along with it. The US and Europe are teetering on the brink between growth and contraction. As central banks have misjudged inflation dynamics, they’ve been forced into delayed action that has been all the more forceful, with rapid and large interest rate hikes. Of course, this has led to the destabilization of interest rate-sensitive sectors, such as finance and real estate. The unusually long period of extremely low interest rates favored speculative investments, which now need to be cleared up. The bank runs seen in the US and at Credit Suisse are a disturbing reminder of how quickly these system-threatening developments can occur, even in this age of digitalization.

Read more in the Macroeconomic Comment by Peter von Elten.