Megatrends : known threats but include hidden opportunities too…..

Nourel Roubini has pointed out to ten trends that have the potential to hugely redefine our future- and more so in a negative way. Author sees the inevitable coming of stagflation, which is going to be severe and prolonged because of economic decisions taken historically that promote debt and lead to boom-bust cycles, and recent government and central banks' fiscal and monetary responses to meet COVID challenges.

Megathreats emerging from demographic, geopolitical, environmental, and technological fields, with the potential to realize simultaneously, will further exacerbate the situation by imposing supply and demand side shocks to the economy

Some of these threats are well known, and to that extent, the book doesn’t add much to the literature related to these areas. For example, issues coming out of strained China relations, increasing protectionism and changing trade patterns, the growing burden of an aging population and shrinking workforce, the multi-dimensional impact of climate changes, advancement in AI and its impact on employment, weaponization of Dollar and its implications on currency markets, and dangers of crypto-currency going mainstream. These are complex topics that are being intensely debated and researched elsewhere and to that extent, it is not fair to expect the author to be hugely insightful and original in analyzing these trends.

While the book lists what all is and can go wrong, it provides very little guidance or ideas on how to arrest the situation. Author's recommendations for averting these mega-threats are bordering more on hope than a structured plan or a specific set of interventions. His viewpoint that 5 to 6% growth in advanced economies, will help to come out of economic mess hinges on assumption that prosperity generally helps tide tough situations better, and also reduces conflicts. How to make economies that are traditionally growing at 2-3% double their growth rates? And doing it in a way that doesn’t worsen the debt trap, create bubbles, sustain employment, increase inequality etc etc.

Further prosperity distributive mechanisms need to be equally strong, given the toxic effect of inequality on peace in the society, and providing universal basic income type of interventions may not be enough.

Expecting technological innovations to come to the rescue by significantly improving productivity and making growth green, climate-friendly, and sustainable is stating the obvious. Accelerating the speed of innovation and mainstreaming its use in a fragmented world with commercially diverse interests and diverse strategic priorities, is another challenge- so much evident during the recent CoVID Vaccine development and distribution game being played at the global level.

The author has analyzed the global macro-trends with a predominantly American perspective, with some references to Europe and China. Clearly, the implications of these trends may not be equally severe or threatening for all countries across the globe.

Seeing from India's perspective, the decoupling of US- China, demographic shift, changing role of global currency (USD), and shifts in global supply chains. the growing movement towards green technologies and rise of AI may actually be MEGA-BOOSTERS, creating immense opportunities and driving next phase of growth.

As rightly suggested by Roubini, we should recognize the need for revisiting one’s traditional investment portfolio (60:40 Equity-Debt) to potentially include short-term bonds, Gold, and Real-estate, as these are likely to help protect capital in uncertain and inflationary scenarios better.

In short, while the book does reasonable justice to listing the dark sides of major global trends, it severely falls short of any new and fresh advice on how to handle these threats and lessen their likelihood to materialize and improve society’s resilience to manage the overall impact.