The world economy is defying gravity. That cannot last

EVEN as wars rage and the geopolitical climate darkens, the world economy has been an irrepressible source of cheer. Only a year ago, everyone agreed that high interest rates would soon bring about a recession. Now even the optimists have been confounded.

America’s economy roared in the third quarter, growing at a stunning annualised pace of 4.9 per cent. Around the world, inflation is falling, unemployment has mostly stayed low and the big central banks may have stopped their monetary tightening. China, stricken by a property crisis, looks likely to benefit from a modest stimulus.

Unfortunately, however, this good cheer cannot last. The foundations for today’s growth look unstable. Peer ahead, and threats abound.