The global economy is entering the final quarter of 2021 with a mounting number of head winds threatening to slow the recovery from the pandemic recession and prove policymakers’ benign views on inflation wrong.
The spreading Delta variant continues to disrupt schools and workplaces. U.S. lawmakers are wrangling over the debt ceiling and spending plans. China is suffering an energy crunch and pursuing a regulatory crackdown, while markets remain on edge as Chinese company Evergrande Group struggles to survive.
Fuel and food costs are soaring worldwide, combining with congested ports and strained supply chains to elevate price pressures. Labor shortages continue to plague some employers.
Although the expansion seems intact, such a backdrop is fanning fears of a mix of weaker growth and faster inflation to come, threatening to complicate nascent efforts by central banks to dial back stimulus without rattling markets.