A Resilient World Economy, and its Price

The global economy has held up better than a noisy summer might suggest, with tensions in the Middle East, intervention to steady the yen, and nerves over AI spending all unsettling sentiment — yet the data have stayed firm and the pressure on interest rates has been upward, not down. In this week's publication we look at why the world economy is proving so resilient, and at the rising cost — in both capital and resources — of the investment boom now under way:

Global activity has climbed back above its normal trend.

Policy-rate expectations have been marked up across almost every major economy.

The neutral rate is now higher than in 2019 in every advanced economy.

The rise is led mainly by the swelling supply of government debt.

Banks have stopped tightening — the investment boom is funded from profits, not debt.

The real copper price sits close to a multi-decade high.