The world faces a growing stagflationary storm | Nouriel Roubini

Covid and Russia-Ukraine war add to long-term problems causing higher inflation and slowing growth

The new reality with which many advanced economies and emerging markets must reckon is higher inflation and slowing economic growth. And a big reason for the current bout of stagflation is a series of negative aggregate supply shocks that have curtailed production and increased costs.

This should come as no surprise. The Covid-19 pandemic forced many sectors to lock down, disrupted global supply chains, and produced an apparently persistent reduction in labour supply, especially in the US. Then came Russia's invasion of Ukraine, which has driven up the price of energy, industrial metals, food, and fertilisers. And now, China has ordered draconian Covid-19 lockdowns in big economic hubs such as Shanghai, causing additional supply-chain disruptions and transport bottlenecks.