Christine Lagarde, Managing Director of the International Monetary Fund. Photo: Ting Shen/Xinhua News Agency/PA Images

This week, we will hear a lot from the IMF and World Bank spring meetings in Washington about the tensions in the world over trade and tariffs, the virtual standstill in productivity growth, and the question of how to secure reductions in both economic inequality and carbon emissions. The main media focus, though, will be on the IMF’s view about where the world economy is heading, against a background of rising angst about the strength and durability of what is already quite a long economic expansion.

The IMF lowered its global growth forecasts for 2019 and 2020 to about 3.5 per cent in January, and a further small downgrade is likely. No recession is forecast, but the IMF will probably say the expansion is becoming more delicate in view of policy uncertainties in many major regions, the effects of trade tensions, and the deleterious impact of political flux and populism on consumer and business sentiment.

The US expansion continues, even if at a lower tempo, and by July it will become the longest since business cycle records started in 1854. It’s already 39 quarters old as of March 2019, and by June will match the longest ever expansion that lasted from 1991-2001. Pervasive concerns in financial markets a few months ago that the Federal Reserve would kill off the expansion by over-tightening have faded, now that the Fed has indicated a more dovish stance. So it is possible the expansion could just keep rumbling on into 2020. The one-off impact of Trump’s 2018 tax cuts has passed, and “fiscal drag” is evident as America’s growth becomes more sluggish. But for the moment the economy rolls on, while job growth is continuing, unemployment is low, wages are picking up a bit.

Remember that expansions don’t die of old age. Consider Australia, whose expansion has been underway for 27 years. Expansions end when someone or something chokes them.

China was a worry over the winter, but as the government stepped up credit stimulus, cut taxes and allowed the fiscal deficit to rise, the economy seems to have stabilised in the last two months. China’s economy may just about be out of a cyclical dark spot now. None of this means that previous concerns were misplaced, that current stimulus will have strong traction, or that the medium-term outlook…

8909035485df0ba315bfb32.04604905