Bloomberg Businessweek-Europe Edition January 16, 2023

Not for nothing has this been dubbed the “dangerous decade.” Already, a global pandemic, Russia’s invasion of Ukraine and the return of inflation have shaken the 21st century global economy to its core. After the shocks of 2022, a recession for large parts of the world in 2023 seems a safe bet. Tougher to gauge, and more frightening, is the long-term impact of money itself being repriced and the assumptions that underlie more than 30 years of global economic history being overturned. Plentiful cheap labor, low energy and transportation costs and a generally peaceful era for geopolitics all helped turbocharge the globalization of supply chains and drive economic growth around the world in the decades after 1990. Whenever one of those pillars wobbled, there was cheap money to keep the party going,…

For Joe Biden, 2022 was a turnaround year. He entered it bruised and stumbling as inflation soared, Covid‑19 raged and Russia invaded. By the end, he and fellow Democrats had secured a series of victories in Congress, staved off the customary midterm election massacre and beat back skeptics within the party, helped by a resilient job market and receding inflation. It’s left Biden in a buoyant mood heading into 2023, emboldened and all but certain, at age 80, to announce a reelection bid soon. But this year’s path is thornier. Republicans wrested control of the House, which means no more Democrat-only bills rammed through Congress. Biden also faces a spate of Republican investigations, some targeting him directly. And the US may be headed for a recession—courtesy of the Federal Reserve’s barrage of…

Haruhiko Kuroda, the longest‑ serving Bank of Japan governor, is set to step down in April. Over the past decade, Kuroda oversaw one of the world’s most radical experiments in monetary policy, including yield curve control, in which a central bank commits to buying government bonds in order to keep yields at a target interest rate. While major central banks were engaged in the most rapid and aggressive cycle of tightening in decades last year, the BOJ stood pat, even as the yen plunged against the dollar. Investors were caught by surprise toward the end of December when the bank said it would tolerate yields on 10-year bonds creeping up to 0.5%. The move could nudge open the door for future increases, amounting to monetary tightening. Japanese Prime Minister Fumio Kishida is…

New presidents usually start by trimming spending before loosening the purse strings toward the end of their term. But Brazil’s Luiz Inácio Lula da Silva is kicking off his government with a fiscal blast and asking investors to trust he’ll balance the budget later. Even before his Jan. 1 inauguration, Lula secured congressional approval to spend an additional 168 billion reais ($32.4 billion) this year to deliver on campaign pledges. The money will fund expanded cash transfers to the poor; public-health programs; and pay increases for public workers. The extra spending will result in a budget gap equal to almost 2% of gross domestic product in 2023, before interest payments. “These ideas are five centuries old, starting with Machiavelli’s The Prince: First you do the hard stuff, and then, if you plant…

China’s U-turn on Covid Zero is a big deal. But Beijing needs do more if it wants to push economic growth anywhere near the pre-pandemic rate of 6% a year. Xi Jinping and his top economic aides largely brushed the virus to one side when they gathered in Beijing in December to lay plans for the coming year, relegating it to a few lines in the readout of a meeting that focused on boosting consumption and business confidence. “Xi himself is quite determined to bring growth back,” says Yao Yang, dean of the National School of Development, a think tank in Beijing that advises China’s government. Even though a wave of infections is spreading through the country—hammering economic activity as absenteeism at factories and offices spikes and homebound consumers curtail spending—economists expect…

Nigeria’s next president will have a lot on his plate. Whoever wins the Feb. 25 election will have to deal with a security crisis that’s spread to every corner of Africa’s most populous country, with terrorists carrying out mass killings and abductions. Much of the increase in criminality and violence has been driven by Nigeria’s stark economic deterioration over the course of President Muhammadu Buhari’s eight years in office. Production of oil, the lifeblood of the economy, has nearly halved; inflation has roughly doubled; and economic growth has slowed, averaging just 1.1% annually from 2015 to 2021. At least half of Nigerians are under-or unemployed, a figure that rises to two-thirds for young people, who make up the majority of the population. The West African nation is by at least one metric…