The author argues that policies of US President Donald Trump, including a war on Iran and a deal allowing Russian diesel onto global markets, are a source of instability, even though the world economy remains a powerful growth machine driven by innovation, risk-taking finance and debt. The IMF forecasts global growth of 3.1 per cent this year and 3.4 per cent next year, broadly unchanged from April, while global inflation is expected to hit 4.7 per cent this year. He notes that the flexibility of the energy economy and the AI investment boom, the main supports for growth, are not guaranteed to last, and AI investment concentrates risk. The US stands out for its fiscal position, with a forecast primary deficit of 4.8 per cent of GDP this year, T-bills making up 58 per cent of gross borrowing, and an average maturity of just 5.9 years. He calls for rebuilding fiscal space and redressing global current account imbalances, which must, he says, involve China.
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