It’s been a rough couple of weeks for markets across the globe. 

To that end, it’s been a rough year for markets on the whole, but the recent weeks in particular have seen quite a few negative developments. The International Monetary Fund, the most prominent watchdog organization for global financial markets, kicked the month off by forecasting global economic growth in the coming year to be a dismal 2.7 percent. That would constitute, in their words, the “weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.”

The IMF has also been tracking global inflation — the numbers of which shape up like so: “4.7 percent in 2021, a rise to 8.8 percent in 2022, and a forecasted decline to 6.5 percent in the coming year.” Just for reference, inflation above 2 percent is generally considered to be high. 

Markets have been hammered by supply shocks and excessive government spending — both of which are largely products of the COVID-19 pandemic response. In particular, backlogs on the supply side of Asian markets have slowed down many countries’ economies. Asia is the top producer of manufactured goods such as semiconductors, automotive parts, chemicals and metals, and because those items are essential building blocks for most other products, other countries haven’t been able to efficiently churn out finished goods. 

The war in Ukraine has contributed to rising oil and natural gas prices, as well as supply chain disruptions for grain and fertilizer. Europe, in particular, is bearing the brunt of the price hikes. The New York Times reports that European inflation in the month of September topped out at a whopping 10 percent, making it the highest it’s been in two decades. As the continent braces for winter, the forecast for the European economy is going to be grim. Recent weeks have been particularly rough for the U.K.: a tax-cut plan aimed at stimulating growth instead caused treasury bonds to nosedive, which, reports the Wall Street Journal, nearly tanked the country’s economy. The Bank of England had to intervene to stop the bleeding. Public faith in the economy and in Prime Minister Liz Truss has been severely damaged, and Truss suffered a major personal embarrassment in having to publicly scrap the economic policy she had planned to instate for the country. Russian state-owned energy giant Gazprom announced back in September that it would be cutting off Germany from the controversial Nord Stream 2 pipeline, and that, along with lower economic output caused by supply issues, has contributed to uncertainty and decline in their market.

In Japan, the yen is at a 32-year-low owing to government hesitancy to raise rates as aggressively as in other countries. A report from the Japan Times quoted Finance Minister Shunichi Suzuki as saying that the country is “deeply concerned” about the “unprecedentedly sharp and one-sided movement” of the yen. Japan’s economy hasn’t suffered quite to the degree that the U.S. and Europe have, but they are still dealing with the unavoidable ramifications brought on by the war in Ukraine and the global post-COVID environment. The foreign exchange markets in general have seen lots of turbulence in the last couple of months.  

Meanwhile, in the U.S., people are coming to terms with the reality that the high inflation rate that the nation is dealing with is not — as the Fed claimed last spring — transitory. The persistent inflation has forced the Fed to crank up interest rates higher and higher, which has been helpful for the value of the dollar. However, the rising rates have inherently slowed down the economy as the incentive to borrow money looks less and less attractive with each successive raise. The Wall Street Journal reports that the U.S. consumer price index (CPI) rose by 8.2 percent in September, compared to the previous year, which makes it the fastest that CPI rates have risen in four decades. President of the Kansas City Fed, Esther George, summarized the current state of the U.S. economy well in saying that “we’re dealing with an economy that is adjusting to an extraordinary shock.”

Indeed, the big takeaway for markets in the U.S. and the rest of the world is that the downward trends that we’ve been experiencing (and are sure to continue in the near future) are the result of the perfect storm of economic detractors: war, supply disruptions and the aftermath of a global pandemic.

This article was written prior to the resignation of former U.K. Prime Minister Liz Truss.