Bankers, economists, thought leaders, and business people have converged upon the Beverly Hilton in Los Angeles to hear the good word about what’s next for the global economy.
It’s the Milken Conference 2016, and the good word is not that good.
“The growth model for the advanced world is getting exhausted and for emerging markets it’s getting contaminated,” said Mohamed El-Erian, chief economic advisor at Allianz.
The world famous economist is speaking on an opening panel for the conference called ‘Global Capital Markets: Deflation or Stabilisation?’ Basically what the speakers tried to get at was whether or not the global economy is going to grow, or we’ve reached a sickly new normal.
It seems that the speakers settled on the latter. Central Banks around the world are running out of tools to spur growth, and suddenly the story of the global economy has changed.
Here’s how El-Erian sees it now:
- Before and just after the financial crisis, the developed world was growing through financing — first private, then through what Central Banks were providing.
- That’s where we get to that really sad quote about exhaustion and contamination.
- So what’s next? Not just low growth, but uneven, unstable growth, according to El-Erian.
- Then “the road ends, and I’ll stop right there,” said El-Erian.
- There was a sad chuckle throughout the room.
No one has a lot of answers. They’re just trying to figure out how to navigate this.