JAKARTA (TheInsiderStories) – The biggest source of disruption to the global economy in 2019 might come from various technologies being developed in Asia and the United States (US), said an analyst. The rise of Artificial Intelligence (AI) technology and industry had encouraged the creation of a global economic disruption, especially by companies in Asia-Pacific, said a senior analyst.
According to Chief Economist of Credit Suisse James Sweeney, these include electric vehicles (whose sales have risen sharply), sustainable genetic development including the use of CRISPR, 5G networks, and continued innovation from technology companies that use algorithms to help businesses find efficiency.
He explained, the global economic disruptive is still volatile triggered by increasing trade and other tensions between the US and China. Meanwhile, trade in Asia fell sharply in the fourth quarter (Q4) in 2018 because many investors anticipated US rates of 25 percent with US$200 billion in Chinese exports.
“It appears that many firms in Asia cancelled or delayed orders due to fears that tariffs would rise. When the tariffs did not rise, some stabilization in sentiment occurred, but in general, investors can be less assured of a constructive US-China relationship compared with 12 months ago,” he said last week.
According to him, interference can come from many sources. When it comes to new technology, some businesses and jobs are likely to be moved, but overall economic output will increase, softening the blow.
But, when disruption comes from politics, it decreases general trust in a stable business environment, and can lead to less risk taking.
“The intersection of debt dynamics, the end of an era of quantitative easing, and a new period of tight labor markets, acting in concert, is an unrecognized disruptive trend that investors should focus more on,” said.
According to the Managing Director of Credit Suisse, the trend that disrupts economic downturn is the economy operates full employment, which causes inflation in central bank bond purchases, currency depreciation, or both, where easing is still happening in many countries, so investors are confident that the level of government debt is not a problem, because the central bank can always buy debt.
“The US government’s interest bill as a share of GDP is likely to increase by 100 percent or more over the next half-decade,” he added.
He said, similar dynamics were occurring in all developed economies. However, long-term interest rates are low. The intersection of debt dynamics, the end of the era of quantitative easing, and the new period of tight labor markets, which act together, are disturbing, unrecognized trends that must be the focus of investors.
“By 2019, we expect the US to be less aggressive in trade policy. We expect European growth to improve somewhat. And we expect China’s policy reaction to the recent weakness of growth to help stabilize the local economy,” he closed.
Written by Daniel Deha, Email: email@example.com