Take the US economy to begin with. There, economic activity is cooling just the way we want — from a pace that generated high inflation to a more sedate pace, without tipping over into a recession. The US manufacturing sector is weakening but the much larger services sector still appears in fine fettle. Businesses are only cautiously cutting back on hiring but are not laying off workers. That allows the labour market to cool without producing the surges in unemployment that produce recessions.
The hard economic indicators suggest that there are enough bright spots in the world economy to justify guarded optimism about prospects in our region for the rest of this year. Against this, however, there are several potential perils around us which, if realised, would cause us grief. Regional economies need to develop sufficient buffers to absorb possible shocks and if they can do so, they could better navigate themselves through the storms ahead.
US economy in the right spot
Economic indicators paint a better picture of the world economy than what nervous financial markets indicate: the major drivers of global growth are in relatively decent conditions.
