America is driving the West’s response to the war in Ukraine. But U.S. officials are struggling to project a global response to a worldwide economic slowdown.
A sense of dread surrounded meetings of finance ministers and central bankers in Washington this week, amid one of the most foreboding moments for the world economy in years. The list of worries was alarmingly long: stubbornly persistent inflation, crippling interest rates, panic around the worsening energy supply crisis, manic markets and the spiraling of the U.K. government.
“The worst is yet to come,” IMF Managing Director Kristalina Georgieva said this week, capturing the tone that pervaded the discussions of the world’s most powerful economic officials.
Absent from the frenzy: The kind of sweeping, coordinated effort the U.S. has led in previous episodes when the global economy was on the brink.
The leadership gap speaks to the overriding challenge of the moment, as national leaders and central bankers across the globe focus on averting domestic crises triggered by surging inflation and shocks from Russia’s escalating war in Ukraine. The Federal Reserve is at the forefront, as it ratchets up interest rates and fuels recession risks in a bid to control rising prices.
“At the end of the day, a lot of the national policies are on their own course,” said Mark Sobel, U.S. chairman of the Official Monetary and Financial Institutions Forum and a former Treasury official. “The Fed is going to do what the Fed is going to do, and the Europeans are going to do what they’re going to do.”
The global turmoil provides the latest test of U.S. influence over international affairs, after the Biden administration sought to re-engage with the world in the post-Trump era. [Continue reading…]