War, Inflation Knock World Economy Off Balance

Covid-19 lockdowns, corruption crackdowns and more have put China’s economy on a potential crash course. WSJ’s Dion Rabouin explains how China’s economic downturn could harm the U.S. and the rest of the world. Illustration: David Fang

The global economy is sputtering and financial markets are flashing red, reflecting a sense on Wall Street that a sharper slowdown in worldwide economic activity is likely inevitable.

The culprits are surging inflation, a robust central-bank response, anxious investors and the impact of Russia’s aggression in Ukraine. The U.S. economy has largely escaped the worst of these ills, but a rising dollar is punishing the rest of the world at a time when price increases in many places are already outpacing incomes.

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