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On September 2, 2024
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[1]
World economy will avert recession and get a boost from technology, says Nouriel Roubini
Global industry leaders suggest that artificial intelligence could significantly uplift the global economy, countering challenges like deglobalisation and geopolitics. They see technology leading to increased productivity and reduced costs. The US election's outcome also holds potential impacts on the global markets and trade flows. Artificial intelligence could deliver a booster shot to the global economy that faces the challenges of deglobalisation, turbulent geopolitics, and high capital costs, and the risk of policy reversal in the US after the presidential elections, according to global industry leaders. The world economy will avert a recession and get a boost from AI and other technologies that would spur productivity and lessen the cost of production, said Nouriel Roubini, Professor Emeritus, Stern School of Business, New York University. "It's a tug of war between technology leading us in the right direction and lots of other things leading us to negative aggregate supply shocks," said Roubini. "I think that over the medium term, technology is going to dominate. But in the short run, those stagflationary forces may be more dominant." Roubini believes that the US stock market is unlikely to see more than 10% correction. "But to get the real bear market in the US public market, we need a recession. And for now, the recession would not be my baseline," he said. "Given the disruption that AI is going to provide, there are some scenarios where US potential growth by the end of this decade could be above 3% as opposed to the current 1.8%," he added. He was speaking during a panel discussion on 'Navigating The New Normal: Doing Business in Rising Uncertainty' on Saturday. The world of business is learning ways to capture value from AI, said Rich Lesser, Global Chair, BCG. "Companies want to pick a few areas where the impact of AI can be deeper rather than peanut buttering," said Lesser. "The people part of it is extremely challenging. The AI that we've been doing with for the last eight years may have touched 5% of the workforce in an organisation. These technologies can touch 50% of the organisation," he said. Focusing on the US polls and its impact, Ritu Arora, CEO & CIO (Asia Pacific), Allianz Investment Management said the elections will have a major bearing on the capital markets. "We are with great anticipation looking at how the US chooses their leader, and I think that will have a significant impact not just on the US economy and capital market but on the global economy. It will have an impact on the trade flows," she said. Arora said it was "heartening" to see strong retail participation in the Indian stock market, which has helped counter the influence of foreign institutional investors. She, however, cautioned that "a bit of froth" has been created in IPOs and small caps, and termed it as a cause for worry. According to Arora, if there's any fall out due to the US elections or geopolitical stress, "we might see retail investors impacted and hurt in the bargain because they are significantly invested in small caps." Institutional flows into India have risen sharply partly due to stress in China, said Arora. "China remains under stress, and India is structurally well poised to benefit from that stress China is witnessing," she said. "We have all the fundamentals in place, structurally strong, economy doing well, resilient. China's loss, as is often said, could be India' gain." The world needs close cooperation to meet climate goals, said Marc-Andre Blanchard, Head, CDPQ International and global head of sustainability. Both the Global North and the Global South will have to transition, and funding will be crucial to achieve that, he said, adding that the global atmosphere has become less conducive for this change. "We did not succeed in doing this when inflation was low, and the interest rates were low and when the geopolitics was a bit calmer. And now we need to do it in a very different context, and last year was the proof that it's so difficult," said Blanchard. The positive, however, is that the private sector has now got deeply involved and the discussions on sustainability at global forums have moved from 'what' to 'how', he added. Roubini also warned of the many risks to the global economy. "We have a process of excessive deglobalisation that is leading to protectionism and is going to fragment the global economy. We have a geopolitical depression," he said, adding that countries are prioritising economic security over economic efficiency. He also warned of the "moral hazards" due to regular interventions by the US government and the US Federal Reserve in case of financial troubles.
[2]
World economy will avert recession and get a boost from technology, says Nouriel Roubini
Artificial intelligence could deliver a booster shot to the global economy that faces the challenges of deglobalisation, turbulent geopolitics, and high capital costs, and the risk of policy reversal in the US after the presidential elections, according to global industry leaders. The world economy will avert a recession and get a boost from AI and other technologies that would spur productivity and lessen the cost of production, said Nouriel Roubini, Professor Emeritus, Stern School of Business, New York University. "It's a tug of war between technology leading us in the right direction and lots of other things leading us to negative aggregate supply shocks," said Roubini. "I think that over the medium term, technology is going to dominate. But in the short run, those stagflationary forces may be more dominant." Roubini believes that the US stock market is unlikely to see more than 10% correction. "But to get the real bear market in the US public market, we need a recession. And for now, the recession would not be my baseline," he said. "Given the disruption that AI is going to provide, there are some scenarios where US potential growth by the end of this decade could be above 3% as opposed to the current 1.8%," he added. He was speaking during a panel discussion on 'Navigating The New Normal: Doing Business in Rising Uncertainty' on Saturday. The world of business is learning ways to capture value from AI, said Rich Lesser, Global Chair, BCG. "Companies want to pick a few areas where the impact of AI can be deeper rather than peanut buttering," said Lesser. "The people part of it is extremely challenging. The AI that we've been doing with for the last eight years may have touched 5% of the workforce in an organisation. These technologies can touch 50% of the organisation," he said. Focusing on the US polls and its impact, Ritu Arora, CEO & CIO (Asia Pacific), Allianz Investment Management said the elections will have a major bearing on the capital markets. "We are with great anticipation looking at how the US chooses their leader, and I think that will have a significant impact not just on the US economy and capital market but on the global economy. It will have an impact on the trade flows," she said. Arora said it was "heartening" to see strong retail participation in the Indian stock market, which has helped counter the influence of foreign institutional investors. She, however, cautioned that "a bit of froth" has been created in IPOs and small caps, and termed it as a cause for worry. According to Arora, if there's any fall out due to the US elections or geopolitical stress, "we might see retail investors impacted and hurt in the bargain because they are significantly invested in small caps." Institutional flows into India have risen sharply partly due to stress in China, said Arora. "China remains under stress, and India is structurally well poised to benefit from that stress China is witnessing," she said. "We have all the fundamentals in place, structurally strong, economy doing well, resilient. China's loss, as is often said, could be India' gain." The world needs close cooperation to meet climate goals, said Marc-Andre Blanchard, Head, CDPQ International and global head of sustainability. Both the Global North and the Global South will have to transition, and funding will be crucial to achieve that, he said, adding that the global atmosphere has become less conducive for this change. "We did not succeed in doing this when inflation was low, and the interest rates were low and when the geopolitics was a bit calmer. And now we need to do it in a very different context, and last year was the proof that it's so difficult," said Blanchard. The positive, however, is that the private sector has now got deeply involved and the discussions on sustainability at global forums have moved from 'what' to 'how', he added. Roubini also warned of the many risks to the global economy. "We have a process of excessive deglobalisation that is leading to protectionism and is going to fragment the global economy. We have a geopolitical depression," he said, adding that countries are prioritising economic security over economic efficiency. He also warned of the "moral hazards" due to regular interventions by the US government and the US Federal Reserve in case of financial troubles.
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Economist Nouriel Roubini predicts the global economy will avoid recession in 2024, citing technological advancements as a key factor. His optimistic outlook contrasts with his previous pessimistic forecasts.
Nouriel Roubini, the economist known for his pessimistic predictions, has surprised many with his latest forecast for the global economy. Speaking at the World Governments Summit in Dubai, Roubini stated that the world economy is likely to avoid a recession in 2024, marking a significant shift from his previous dire warnings 1.
At the heart of Roubini's optimistic outlook is the role of technology in boosting economic growth. He emphasized that advancements in artificial intelligence (AI) and other technological innovations are set to drive productivity gains across various sectors. This technological boost, according to Roubini, will play a crucial role in averting a global recession 2.
Despite his overall positive outlook, Roubini did not shy away from addressing potential risks to the global economy. He highlighted ongoing geopolitical tensions, particularly mentioning the conflicts in Ukraine and the Middle East, as factors that could impact economic stability. These geopolitical issues, he warned, have the potential to disrupt supply chains and energy markets 1.
Roubini's latest predictions represent a notable departure from his previous forecasts. Known for his bearish views, which earned him the moniker "Dr. Doom," Roubini had earlier warned of a potential stagflationary debt crisis. This shift in perspective suggests a changing economic landscape, where technological advancements are increasingly seen as counterbalances to traditional economic challenges 2.
The economist's comments come at a time when major economies are showing signs of resilience. The United States, in particular, has demonstrated stronger-than-expected economic performance, with robust job growth and cooling inflation. This positive trend in the world's largest economy aligns with Roubini's more optimistic global outlook 1.
Roubini's forecast has significant implications for policymakers and investors worldwide. If his predictions hold true, it could influence monetary policies, investment strategies, and economic planning across nations. The emphasis on technology as a key growth driver may also lead to increased focus and investment in tech-related sectors and innovation 2.
Reference
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India's Chief Economic Advisor, V. Anantha Nageswaran, cautions that the rise of artificial intelligence could decelerate growth in the country's Business Process Outsourcing (BPO) sector, potentially affecting services exports.
3 Sources
Arnab Das, global market strategist at Invesco, discusses the future of AI technology and its impact on the global economy, emphasizing its role in the Fourth Industrial Revolution despite recent market corrections.
2 Sources
Recent global market turbulence, influenced by AI economics, the yen carry trade, and the Sahm Rule, is causing ripples that India cannot afford to ignore. These factors are reshaping economic landscapes and investment strategies worldwide.
2 Sources
India's Economic Survey 2023-24 warns of AI's potential to disrupt employment, emphasizing the need for reskilling and adaptation in the job market. The report highlights both opportunities and challenges presented by AI technologies.
13 Sources
India's Economic Survey 2023-24 emphasizes the significant influence of Artificial Intelligence on the job market and economic growth. The report discusses both potential benefits and challenges, particularly for certain sectors and skill levels.
4 Sources