What if things go right for the world economy?

Hello from London,

How gung-ho do you feel about the economy? As the Federal Reserve meets this week, an optimist may point to reasons for hoping the American economy can manage a soft landing—in which price growth is slowed and recession is avoided. Other economies also have something to cheer. China’s re-opening, with covid restrictions eased, should (mostly) be an economic boon. A mild winter has helped Europe.

No wonder markets all over the place have been in high spirits in January. Yet, as we set out in our recent editorial on the world economy, gloomsters’ warnings should also be heeded. Have a read of the whole piece. And while you’re at it, take a look at our analysis of the drooping fortunes of Goldman Sags—sorry, Goldman Sachs—a once-dominant bank that is badly stuttering.

Meanwhile, it turns out that some leopards do change their spots. Olaf Scholz has at last agreed to send some Leopard 2 tanks to Ukraine, and will let others do so too. Joe Biden, in turn, will send Abrams tanks. We’ve praised them both. The Leopards matter more—and not only because they’ll arrive first and in greater numbers. (This Explainer sets out why.)

What next in Ukraine? We’ve just run a series of By Invitation essays in which outside commentators set out their cases for and against exploring peace negotiations with Russia. In the latest two, Christopher Chivvis, a former intelligence officer, argues that the West should encourage Ukraine to talk, while Ben Hodges, a retired general, says Ukraine, properly supported, can retake Crimea. You won’t be surprised to hear that I’m against talks—trying to plead with a bully is only a recipe for failure. But it’s well worth airing the arguments.

Have a read, too, of our new story on recently liberated parts of Ukraine, where locals are busy “de-Russifying”. One unsurprising effect of Russia’s invasion and attacks on civilians is that ordinary Ukrainians are ever more hostile towards their neighbour.

One anniversary I’m keen to observe takes place on February 4th. That day brings up a year since Vladimir Putin and Xi Jinping had a cosy meeting in Beijing to declare the “no limits” friendship between Russia and China. Perhaps the alliance of autocracies seemed a brilliant idea at the time. Less so now. We’re also looking at China’s relations with America. Lately there has been a lull in Sino-American rancour, but the creation of a new, Republican-led, congressional committee could change that.

In the coming days, finally, I’ll be gripped by a colourful tale of a corporate titan’s teetering fortunes. No, this isn’t about Elon Musk losing his many billions. Watch instead to see how Gautam Adani—who had been crowned as Asia’s richest man—copes with a sharp sell-off of shares in his various firms, after the publication of a scathing report by Hindenburg Research, a New York investment firm. (The indignant Adani Group has called the report “maliciously mischievous” and is reportedly considering legal action.)

Thanks for your comments in response to my question about China’s long-term fortunes. The wisdom of this particular crowd? Overwhelmingly you remain optimistic—more than I am, at least—about China’s ability to manage this change. Wolfgang R?hr, in Germany, who had lived and worked in China for decades, is typical in saying he is “convinced that its economy will come roaring back”. Colin Childs, in Hawaii, sees China’s built-in advantages—such as its control of much of the world’s supply of precious metals—delivering for the long term. And Luc Lalongé, in Canada, even sees China’s demographic decline as an advantage “for the Communist Party, always afraid of losing power” because “a shrinking and greying citizenry” is less prone to revolts.

Please write to me at [email protected], or follow me on Twitter.

Adam Roberts, Digital editor

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