Central banks can’t rescue global economy

New York – Central bankers have managed to steer the world economy clear of a recession while leaving it stuck in the same rut that led to its troubles in the first place.

A torrent of monetary stimulus in recent weeks helped spark a turnaround in financial markets by assuaging investors’ fears of an impending global downturn. Yet it did little to lift hopes among economists of a stronger pickup that would put growth on a more solid footing.

 

“The global economy will continue to muddle along,” said Charles Collyns, chief economist for the Institute of International Finance in Washington and a former US Treasury official. He sees growth this year of about 2.5 percent – the same as in 2015 and well short of the 3.7 percent average over the five years leading up to the global financial crisis.

The concern is that policy makers are mainly putting off the pain for now while adding to the difficulties they’ll face later. What’s more, the meager growth they’ve generated means a downside shock still threatens to sink the world into recession, with central bankers already pressing against the limits of their powers.

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