Investors are becoming too optimistic about the world economy

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Investors are becoming too optimistic about the world economy
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A rare surge of optimism is running through financial markets. But investors are getting ahead of themselves

Save time by listening to our audio articles as you multitaskAlas, investors are getting ahead of themselves. America’s inflation is coming down because pandemic-related disruptions to supply chains are dissipating. A year ago dozens of ships were anchored outside Los Angeles waiting to be unloaded, and semiconductors and second-hand cars were in short supply. Today the anchorage is empty, there is a glut of chips and car prices are falling. These improvements are likely to continue.

China’s economy has the biggest potential to spring a pleasant surprise in 2023, because it has been so damaged by zero-covid policy and a housing crash. The authorities have unveiled 20 tweaks to their covid rules and 16 measures to help property firms. Yet on both fronts the road ahead will be long and hard. Rising infections mean more lockdowns could be imminent.

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