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Inflation drives global economy to first contraction since COVID

Countries walk tightrope between curbing prices and pulling plug on growth

Bangkok's port along the Chao Phraya River. As the developed world struggles with rising prices, concern grows over spillover effects on the developing world.   © Reuters

TOKYO/BERLIN/NEW YORK/BEIJING -- The global economy in April-June logged its first quarter of negative growth since the coronavirus pandemic began two years ago, as mounting headwinds ranging from surging inflation in the West to zero-COVID restrictions in China weigh on economic activity.

Inflation in particular is a fault line in the world economy, which only stand to widen should a crisis break out in the Taiwan Strait or elsewhere. The U.S. and Europe now face a test on whether they can continue to lead global markets as they struggle to wean themselves from their dependence on cheap Russian energy and Chinese labor.

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