Is a Global Recession Imminent? In For a Long Grind, says Ruchir Sharma

“We’re likely to have a very different economic cycle where the recession, if and when it comes, will be much later than anticipated,” said Mr. Sharma at the Nomura Investment Forum Asia 2023.

Almost six months into the year, Ruchir Sharma, Chairman of Rockefeller International and Founder and Chief Investment Officer of Breakout Capital, says his forecasts for 2023 are largely panning out. Mr. Sharma, author of The 10 Rules of Successful Nations, discussed the predictions he made at the start of this year during a fireside chat at Nomura Investment Forum Asia 2023.

Two underlying predictions

Despite strong consensus that a recession is imminent, Mr. Sharma says “we’re in for a long grind.” This, he explains, means “we’re likely to have a very different economic cycle where the recession, if and when it comes, will be much later than anticipated.” This is due to excess stimulus and excess liquidity in the system that could prop up both consumers in the US and financial markets in general.

But when the downturn comes, Mr. Sharma says more sticky inflation will limit central banks’ capacity to stimulate the economy. “Any downturn that sets in is likely to last longer or at least any recovery from that is likely to be shallower than what we’ve seen in the past,” he said.


As a financial superpower, the US has never been so powerful in terms of the US dollar and its usage in international transactions. The share of dollar debt to total global debt is close to an all-time high, and has in fact gone up over the last decade, noted Mr. Sharma.

After 100 years, the US dollar’s reign as the global reserve currency also seems unchallenged. But we are beginning to see central banks around the world rebel against the dollar standard, he said, pointing to the significant decline in the dollar share of global FX reserves and the increase in central bank reserves of gold and other currencies such as the Canadian dollar.

The US economy accounts for 25% of global GDP but the US share of global market cap is more than 60%, well above its long-term average of around 45%. Mr. Sharma sees this “big disconnect” as unsustainable and expects the US markets to underperform on a relative basis this year and decade.

One wrong call

He says the one thing he got wrong is the continued rally in tech stocks, especially the mega cap tech stocks. “I said the concentration of mega cap tech stocks was unprecedented and if capitalism is functioning in any way we should see more creative destruction and the emergence of new companies.” But that call has not panned out so far as the same companies that were dominant at the start of the decade continue to dominate today.

Blue bird

The opposite of black swan — an unpredictable event or unknown risk that can destabilize the global economy — is a blue bird, “a bird of joy which appears all of a sudden when things are very gloomy,” said Mr. Sharma.

AI has been the possible blue bird so far, giving new hope to the US and Asian stock markets. And while economists are saying that AI could mean an end to the decades-long productivity downtrend, Mr. Sharma says he is not sure how much of the current AI craze is hype.

“I am very weary of chasing this right now even if this is a blue bird as there is too much hype in too short a span of time and we’re going to need much more time to sift through this,” he said.


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