World entering “synchronized stagnation,” say FT, Brookings: The global economy is heading into so-called “synchronized stagnation” as growth stalls in advanced economies and flatlines in emerging markets, according to an index created by US think tank the Brookings Institution and the Financial Times. The Tracking Index for the Global Economic Recovery (Tiger), comprised of a number of indicators that measure economic activity, investor confidence and financial markets, suggests that while a recession is still not certain, advanced and developing economies are simultaneously stagnating with no apparent light at the end of the tunnel. “Persistent trade tensions, political instability, geopolitical risks and concerns about the limited efficacy of monetary stimulus continue to erode business and consumer sentiment holding back investment and productivity growth,” economist and senior fellow at Brookings Eswar Prasad writes.

It’s not all bad: Employment figures are continuing to hold up, even in Germany where an industrial slump looks likely to push the economy into recession. And the 10% surge in oil prices that followed last month’s attack on Saudi Aramco proved to be short lived, with Brent and US prices quickly returning to their previous levels.

That said, the world is in need of a plan. Hoisting the global economy out of this rut requires that policymakers take action to coordinate new fiscal and monetary stimulus programs. But with ultra-low or negative interest rates fast becoming the new normal, the use of monetary policy will become “increasingly untenable,” Prasad suggests. “Unless governments make a broader commitment to structural reforms and the prudent use of fiscal policy, persistently low rates will remain a malignant feature of the world’s synchronized stagnation,” he writes.