The global economy is muddling through against the odds. But a storm is coming | Larry Elliott

AI desk brief

The piece argues the global economy is being held up for now by AI capex, inventory drawdowns and cheap Chinese exports, but says the underlying backdrop is deteriorating: Middle East conflict, a serious energy shock, fragile supply chains and rising debt-financing pressure. For precious metals, that combination is mildly bullish through higher inflation risk, fiscal stress and safe-haven demand, even if near-term disinflation from Chinese exports and policy tightening partially offsets it.

The article also highlights IMF and Bank of England warnings on tighter fiscal policy, with governments facing political resistance to austerity. It flags a key catalyst for markets: if Middle East tensions ease and oil prices fall, some of the inflation/risk premium could unwind; absent that, the author expects a “crisis postponed” rather than resolved.