Top Economist says Headed for a ‘Profound Economic and Financial Shift’

Fortune | Alena Botros  | Nov 23, 2022

The former CEO of PIMCO sees three trends that suggest a transformation in the global economy is under way.

• There’s a tendency to see economic challenges as “temporary and quickly reversible,” El-Erian wrote in a commentary for Foreign Affairs. He referenced economic theory that a recession occurs when a business cycle reaches its natural endpoint and before the next cycle really takes flight, but he said this time won’t be one more turn of the “economic wheel,” as he sees the world experiencing major changes that “will outlast the current business cycle.”
• 3 Major Shifts:
  • 1.  The first shift was driven by the effects of the pandemic, beginning with the entire system coming to a halt and stimulus from the government, or what El-Erian called “enormous handouts,” causing “demand surges well ahead of supply.”
  • 2. It’s tied to Russia’s invasion of Ukraine that resulted in sanctions and geopolitical tensions, along with a widespread labor shortage brought forward by the pandemic. These disruptions in supply chains gave way to “nearshoring,” a more permanent shift of companies moving their production closer to home, rather than a reconstruction of the 2019-era supply chain. This essentially reflects a change in the “nature of globalization.”
  • 3. “Making matters worse, these changes in the global economic landscape come at the same time that central banks are fundamentally altering their approach,” El-Erian said. As he has been for months now, El-Erian criticized the Federal Reserve in particular for being too slow to recognize inflation entrenching itself into the economy, and then for its steep rate hikes to make up for lost time.

How Canada’s economy is being impacted by the war in Ukraine

Post-Covid U.S. Tech Economy: Top 20 Cities Venture Capital 2021

The world isn’t just teetering on the brink of another recession,” he continued. “It is in the midst of a profound economic and financial shift. The fragility of the financial system also complicates the job of central banks,” he said. “Instead of facing their normal dilemma—how to reduce inflation without harming economic growth and employment—the Fed now faces a trilemma: how to reduce inflation, protect growth and jobs, and ensure financial stability.

Continue to the full article –> here

The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada’s Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org