Policymakers are treading a fine line

GLOBAL ECONOMY

As we approach the year end, three of the major continental contributors to global activity face significant challenges.

Europe remains in the grip of the euroland crisis, the North American outlook is clouded by the impact on the US economy of a potentially huge fiscal tightening, and Asian growth prospects are challenged by the problems facing both the Chinese and Japanese economies. These obvious hazards, combined with more nebulous but potentially very damaging geopolitical threats, threaten to bring a highly uncertain period for the world economy. The common denominator remains debt – for the most part, public sector debt. When the financial crisis first emerged, private sector leverage was most co...