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TMA Talks

Recession Fears Divert Attention from Deeper Structural Economic Issues
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Welcome to TMA Talks, a regular series of podcasts hosted by TMA Global CEO Scott Y. Stuart, Esq. Each segment features prominent TMA members, industry experts, and other special guests. These exchanges, edited transcripts of which are printed in the JCR, offer insights into key markets, forward-thinking economic outlooks, insider thoughts on industry trends, and much more. TMA Talks podcasts are available on the TMA podcast channel. Subscribe to our channel wherever you find your podcasts.

SCOTT STUART: Welcome to TMA Talks. I’m Scott Stuart, CEO of the Turnaround Management Association, and today I have the privilege and honor of interviewing Dr. Dambisa Moyo, world economist.

DR. DAMBISA MOYO: Thank you for inviting me. I’m delighted to be here.

STUART: Dr. Moyo, you are world-renowned for your knowledge about what’s going on in the world and the world economy and of a lot of the imbalances. So, high level, what do you think the economy, both here in the U.S. and overseas, is moving toward? Are we moving toward a global recession, or is it going to be segment-oriented? What are you thinking?

MOYO: I’m actually pretty constructive on the United States. I think that we certainly are on a trajectory to lower economic growth. That’s for sure. I think the general consensus now is that we’ll land somewhere in the 2%, maybe 2.25%, range. The U.S. story is very different from what we see in the rest of the world, in Europe and places like the emerging markets, where we’ve already started to see contraction in economic growth and very weak growth. In Europe, we’re calling it a stalling growth, a slowing growth environment.

The bigger question that we should be thinking about is more structural, long-term factors. Today, one of the things you and I are going to be talking about is moving away from the short term. Is there going to be a recession in 18 months? As you probably saw, the New York Fed’s forecast is around a 38% probability that there would be one. I’m actually inclined to be on that side. Having said that, just in the last couple of days there was a CFO survey from Duke, which said two-thirds of CFOs of corporations think that we will have a recession by 2020. So, the market is kind of split right now.

But I think we are too focused on these short-term concerns. They’re important, of course, but there are a whole host of deeper structural factors that we need to think about, like income inequality, technology and what that means for a jobless underclass, issues around demographic shifts and the fact that we’re hurtling toward 11 billion people on the planet, natural resources, and the environment. There are real structural things that we haven’t yet got our hands around.

STUART: Technology and disruption are big words that people throw around with ease. Technology is disrupting, but not disrupting in a lot of ways that people embrace. It seems to be disrupting in a way that’s displacing people, and we’re not creating repurposed jobs for them. How are we in the United States and around the world going to deal with that, because that’s our new norm?

MOYO: I think that’s where there’s been a bit of a letdown in public policymaking, because we should have foreseen this. In fact, many forecasts coming out of academic studies suggest that we will see an erosion in the job market. That should have been an indicator for us to double down on education while also ensuring people have the type of education and the types of skills that actually are going to be warranted for a more technological and digital world.

We just had a lot of bad policy decisions over the last 30 years. Jack Ma from Alibaba talks about the fact that Western countries have spent trillions of dollars fighting wars but have made very minimal investment in infrastructure and education, which is much needed.

STUART: It sounds like we’re being shortsighted and not embracing the future which, as you say, is hurtling our way. Let’s talk about climate change for a minute, because there are big parts of the planet not so far into the future that are going to be uninhabitable. Recently, I read a report that in India, for example, temperatures in the summer reached the 120- to 125-degree Fahrenheit range. At some point, that’s going to create uninhabitability. What do we do?

MOYO: I think climate change is a great example of how we need to be much more balanced, much more nuanced about tackling some of these issues. You’re absolutely right that climate change is a critical issue. It’s an urgent issue that needs to be addressed.

But I think we can get ourselves so caught up in a tizzy that we’re not thinking about the innovations and the organizations that are doing an immense amount of work to try to address some of the causes and some of the issues that you’re addressing. I think we’re at a disadvantage when we get so caught up in rhetoric without really understanding that a lot of institutions are investing an inordinate amount of money in alternative forms of energy, whether it’s battery or geothermal or solar. I think it also creates an us versus them culture at a time when we really need much more consensus to move the discussions forward.

STUART: Let me take it one step further and ask you about agriculture and water, two resources that climate change is obviously challenging. Water is becoming an increasingly problematic global issue, and certainly with climate change, agriculture is going to be affected. How does this affect world economies, and how we move forward, understanding that these are big challenges that we’re going to have to face?

MOYO: You’re absolutely right. I think those are going to be increasingly big issues. As I mentioned a moment ago, the world population, according to the United Nations, will continue to grow at a very rapid clip until we reach 11 billion people in 2100. Places like India are adding a million people a month to the population. There are massive population demands at the same time we’re having resource scarcity of energy, water, and arable land. These are all big issues.

But just take energy for a second. There are about 1 billion people, many of them in my home continent of Africa but also in South America and Asia, who have no access to energy in a reliable or cost-effective form. We can’t ignore that. There is a second order of consequences for us saying, “Well, we need to get to zero emissions tomorrow at whatever cost.” There are very considerable costs. You’re talking about people’s ability to access healthcase, to access education. Rather than just turn off the lights and throw out the proverbial baby with the bathwater, let’s try to find real solutions that solve some of these bigger issues that we need to address.

STUART: Let’s jump back into the greatest water cooler conversation all through Europe: Brexit and the mess that it continues to be.

MOYO: It’s the gift that keeps on giving.


It’s never good news when the two largest economies in the world—not just largest in terms of economics but also in terms of power and influence and wingspan, shall we say—are fighting.


STUART: It looked like there was going to be a clear path out of the European Union. Then there wasn’t. Then Theresa May resigned as prime minister, and now Boris Johnson, the new prime minister, tried to suspend Parliament, and now that’s been reversed. Maybe he will and maybe he won’t have elections. You’ve spent a lot of time studying this. What’s the mood in the U.K. now? Are they Brexit-ready?

MOYO: The mood is very volatile, and at this moment in time. The way I would characterize it is that we have a number of scenarios, everything from another election to another referendum to the prime minister being kicked out of office through a vote to a caretaker government to a Labor Party government to a Liberal Party government. There are lots of scenarios, and these scenarios, as disparate as they are, are really trading with very close probabilities of success. Each one of them could possibly happen. This makes it incredibly difficult for business to make investments. It makes it very difficult for to make public policy decisions in such a volatile place. If you’re asking me what’s going to happen, I have absolutely no clue.

But I think one takeaway is what I mentioned a moment ago. Who loses in this scenario? I spend a lot of time in Europe, and in London in particular, and it’s interesting to see how much this topic has dominated the discourse for the last couple of years, to my mind at the expense of issues around climate change, at the expense of issues around healthcare and education, which are suffering, if nothing else because they’re not being discussed and we’re not seeing the innovation we need to address those public policy issues.

STUART: Now that we’re talking about the eurozone, Europe pretty much seems squarely in a recessionary period right now. Is that going to impact on what happens on Brexit? And I think the U.K. economy is suffering a retraction for the first time in some time.

MOYO: That’s exactly right. One of the other challenges in the euro context is that in the U.K., there’s a lot of debt, a lot of private debted households. We’re seeing the situation in Germany. If my recollection serves me, at the last quarter Germany’s growth was basically zero. We’re seeing a lot of economic signals that are very negative. There are bigger structural problems. The demographics of Europe are not great. I would argue that we’re not seeing the types of investments in new technologies and innovation that we would like to see. Europe has not produced any of the FANGs, so to speak—any of the Facebooks, Amazons, etc.—so there are lots of questions around long-term sustainability.

Let’s take Germany. It’s struggling now even with car manufacturing. They are being taken to the shed, so to speak, by the Chinese. Countries that really were at the forefront of innovation and manufacturing are now seen to be sliding back. I think that’s really where I become less sanguine about the fate of the eurozone. I totally understand it as a political construct. I think economically they have too many problems.

STUART: The world’s an interesting place. Let’s jump over to China. The trade war gets a lot of attention, maybe too much attention, because there are countries that are benefiting. Mexico, as we learned here at the conference yesterday, is one. China is still in a pretty strong growth trajectory. Overall, what role is China playing on the world stage right now as far as economics go, and is the trade war as impactful as the panic waves that have been sent through the world about it would suggest?

MOYO: I’m going to China in a month, and I spend a considerable amount of time there. The mood music in Asia in general feels to me quite different from the gloom and doom in Europe and in the United States, where people in business talk very negatively about whether there’s going to be a recession, express concerns about geopolitical risks, etc. That’s not really what I hear in Asia.

The role of China is important and has been growing tremendously through everything from foreign direct investment to trade to capital allocation in terms of providing capital to many countries around the world, not just emerging market countries but also places like Australia. So, I’m a bit more constructive about China’s fate.

It’s never good news when the two largest economies in the world—not just largest in terms of economics but also in terms of power and influence and wingspan, shall we say—are fighting. At the same time, China has been very aggressively and deliberately trying to move away from being beholden to one country or a handful of countries through trade. We know about that. They’ve been very public about that. There are numerous things that they’re doing where we could learn from them. Technology is a space where they are certainly, if not pari passu and equal to where the U.S. is, then definitely ahead—in quantum computing and AI, for example. And I think there’s a lot to be learned in terms of how to ensure that competition is fair and free.

STUART: What about the debt they hold in other economies, particularly the U.S. economy? At some point, that’s a power play they could use if they want to create any level of economic instability. What are your thoughts on that?

MOYO: China and Japan are numbers one and two, respectively, as the biggest lenders to the U.S. government. As you just pointed out, that does insert additional geopolitical risk. But it seems to me that it’s in no one’s interest—neither the Chinese nor the Americans—for the world economy to collapse. If nothing else, if you want to win an election, you need to be seen as delivering economic growth and improving people’s livelihoods.

I’m fundamentally positive that we could see improvement and some kind of negotiation come to fruition. At the same time, we shouldn’t downplay China’s might. I think they have been very smart, and they’re very thoughtful in terms of how they’re approaching public policy.

STUART: Dr. Dambisa Moyo, thanks so much for joining me at TMA Talks today. It’s been a privilege and an honor.

MOYO: Happy to be here.

STUART: This has been TMA Talks live from the 2019 Annual in Cleveland.

Tell us what you want to hear on upcoming TMA Talks. Send your thoughts, ideas, and comments to sstuart@turnaround.org.

Scott Stuart

Scott Y. Stuart, Esq.

TMA Global CEO

Scott Y. Stuart, Esq., is the Chief Executive Officer of Turnaround Management Association, a professional community of 9,000 members that seeks to strengthen the global economy by working save distressed businesses, assist management to navigate off-plan events, and help healthy companies avoid similar pitfalls. He brings nearly 30 years of experience in the restructuring, legal, and distressed investment sectors and has a proven track record of building, growing, and leading successful companies, from corporations to startups.


Dr. Dambisa Moyo

Global economist and New York Times best-selling author Dambisa Moyo is based in London and is a board member of 3M and Chevron. Formerly, she served on the board of Barclays. She is also a member of the Oxford University Endowment Fund Committee. She has a doctorate in economics from Oxford and a master’s from Harvard.

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