The prospects of sustained growth in the world economy are currently clouded by several risks and vulnerabilities. Some have to do with the imbalances that stem from the legacy of the Global Financial Crisis, such as the high level of private and public debt globally. Meanwhile, others originate from contemporary political uncertainties, which threaten to seriously weaken the structures of global economic governance.
[Note: Charts 3a and 3b do not capture the recent bond sell-off in early May, which was in my view a market reaction to an overshooting of euro area sovereign bond prices following the QE’s formal announcement by the ECB in January of this year.]