Downbeat global economy doesn’t mean disaster

THE new year has been rung in by a buildup of recession chatter. From Washington to Singapore, anxiety about a downturn is intensifying. While there are good reasons to be dour about the prospects for the global economy, 2023 doesn’t have to be a write-off. It could even turn out relatively well, given the prevailing pessimism.

Important forces that have dimmed the outlook will probably dissipate. China’s reopening will be bumpy and may buffet commerce before buttressing it. The world needs a China on its feet, even if doesn’t come close to replicating the kind of numbers that typified its heyday in the first decade of the century. By year’s end, the planet’s Number Two power will be more robust than it is today.

Interest rates in the major economies are likely to take a break from the upward march that made 2022 so jarring. Policymakers are starting to talk about this prospect, something that would have been thought reckless a few months ago. The idea of cuts is contentious. Minutes of the Federal Open Market Committee’s December meeting, released Wednesday (Jan 5), warned against anticipating reductions anytime soon. Despite officials’ reluctance to countenance such a shift, it’s a natural next step after a pause.