By
Bhushan Akolkar
April 12th, 2024
Peter Oppenheimer, head of macro research in Europe at Goldman Sachs expects major global economic expansion akin to the late 19th century.
The global economy is fast approaching a new ‘super cycle’ similar to the one experienced during the late 1980s fueled by the rise of Artificial Intelligence (AI) and decarbonization. While speaking on Monday at Squawk Box Europe, Peter Oppenheimer, a researcher at Goldman Sachs, noted that the global economy is moving into a super cycle that is commonly defined by a high employment rate, rising gross domestic product (GDP), and robust demand for goods thus triggering increased prices. He further noted that global super cycles have been preceded by peaks of interest rates and inflation, followed by a decade of falling inflation and interest rates.
Already, the leading global economy, the United States, has recorded a series of interest rate hikes in the past three years but the Federal Reserve has signaled several rate cuts by the end of this year. Moreover, US inflation has dramatically slowed down in the past year without major reports of unemployment. Meanwhile, Oppenheimer highlighted that the world may not record extreme interest rate cuts in the next decade but a change in economic policies to enable privatization and globalization.
In the next coming years, Oppenheimer expects to see a notable rise in AI applications, thus widening human productivity. Furthermore, the ongoing modernization of industrialization has largely been driven by technological developments.
“The second thing that we haven’t yet seen, and I think we’re relatively positive that we will see, is an improvement in productivity on the back of the applications of AI which could be positive for growth and of course for margins,” Oppenheimer noted.
Global Market Outlook
With the help of Artificial Intelligence and blockchain technology, the global economy is fast opening up from traditional geographical areas. For instance, more institutional investors are using blockchain technology to enable real-world assets (RWA) tokenization in areas like carbon credits, real estate, and government bonds, among many others. Consequently, more governments around the world have been enacting regulatory policies that attract web3 investors and developers.
Moreover, there is a significant demand for digital assets from both retail traders and institutional investors. Already, the global cryptocurrency market has eclipsed over $1.7 trillion led by Bitcoin, which has rallied above $47k for the first time since the Terra Luna UST crypto capitulation. Nonetheless, the entire crypto market cap is dismal compared to the global debt that recently eclipsed above $304 trillion.
Meanwhile, more countries are coming together through the BRICS alliance to dethrone the United States dollar as the global reserve currency. Led by Russia, China, and India, the global economic shift is expected to be expedited in the coming years amid the Middle East crisis and the ongoing Ukraine war.