The world has changed so much in the 21st century that its problems require a new set of policies and reinvigorated institutions, says economist Dambisa Moyo.
“I don’t think we can look out into the 21st century and assume that the world is going to keep growing at the same pace,” Moyo said in an interview with Financial Advisor. “We are facing some unique factors, and there’s a confluence of factors that is hurting us economically like never before."
Don’t believe the stock market euphoria, said Moyo, who will deliver a keynote speech about her economic outlook at FA Magazine’s 2017 Inside Alternatives conference on Oct. 23 in Denver. The U.S. economy is unlikely to grow much moving forward, she added.
Moyo, a widely published expert on economic, geopolitical and technological issues and a three-time New York Times best-selling author who sits on the boards of several public companies, said the U.S. economy has a better than one-in-three chance of experiencing a recession in the next 12 months.
“The [International Monetary Fund] has downgraded growth prospects for the U.S. and U.K., and when we think about the way business cycles work, within every eight years or so industrial countries are due for a recession,” she said. “We’re due for a recession from a business cycle perspective. We should ask if we are on borrowed time.”
Even if the U.S. economy avoids a recession in the near term, growth is likely to decline worldwide, driven down by a confluence of long-term global issues, she said.
Demographic decline already dampens the long-term prospects of the developed world, where fertility rates have plummeted. Moyo believes demographic decline will continue to spread to developing and emerging markets.
“It’s clear that the IMF didn’t expect that we would see the rates of growth that we saw before 2014 ever again, and that’s emblematic of the challenges the world faces,” she said. “I do not think many emerging market countries will be able to meet the 7 percent per annum growth which is important to double per capital income, which means they will struggle and there will be implications for the global order.”
Technological disruption simultaneously threatens up to half of the world’s workforce with unemployment, she said, adding that disruption could create an entrenched, unemployed underclass as technology displaces service industry jobs.
Worsening inequality is already stratifying masses of people in the West by socioeconomic class and exacerbating political divisions. Underinvestment in education has reduced social mobility, she said, while globalization has led to the relocation of many manufacturing and industry jobs once held by middle-class westerners.