Understanding the Market | The global economy is entering a new super cycle!

Zhitong App learned that Peter Oppenheimer, the head of macro research at Goldman Sachs Europe, stated that the global economy is entering a new supercycle, with artificial intelligence and decarbonization being two key factors that may have a positive impact in this new cycle.

It is reported that a supercycle is typically defined as a long period of economic expansion, usually accompanied by GDP growth, strong demand for commodities leading to price increases, and high employment rates. Peter Oppenheimer stated that the most recent major supercycle experienced by the global economy began in the early 1980s. He explained that the characteristics of this period were peak interest rates and inflation, followed by decades of capital expenditure, declining inflation and interest rates, as well as economic policies such as deregulation and privatization. At the same time, geopolitical risks eased and globalization strengthened.

However, Peter Oppenheimer added that not all of these factors will continue as they did in the past. He said, "We are unlikely to see a significant decline in interest rates in the next decade or so. We see some resistance to globalization. Of course, we also see an intensification of geopolitical tensions."

Peter Oppenheimer stated that although the current economic development theoretically should lead to a slowdown in financial returns, there are also forces that may have a positive impact, namely artificial intelligence and decarbonization. He said that artificial intelligence is still in its early stages, but as it is increasingly used as the basis for new products and services, it may have a "positive impact" on the stock market. He added, "We haven't seen it yet, but what we are relatively optimistic about is that we will see productivity improvements brought about by the application of artificial intelligence, which may have a positive impact on growth and profit margins."

Peter Oppenheimer pointed out that although artificial intelligence and decarbonization are relatively new concepts, there are similarities in history, with one prominent historical period being the early 1970s and early 1980s, which is "not very different" from the current development. He stated that compared to the present, inflation and rising interest rates in that period may have been more structural issues, but factors such as intensified geopolitical tensions, increased taxes, and strengthened regulations seem similar.

He explained that in other aspects, the current changes can be seen as a reflection of earlier changes in history. He said, "Because we may see this tremendous dual impact, namely the positive impact brought about by technological innovation at a very fast pace, coupled with economic structural adjustments towards decarbonization, we believe this period is more similar to the late 19th century." He pointed out that infrastructure and technological development drove modernization and industrialization, and significant improvements in productivity were the hallmarks of this historical period.

Peter Oppenheimer stated that the most important thing is that these historical similarities can provide lessons for the future. He said, "Looking back, cycles and structural disruptions do repeat, but they will never repeat in exactly the same way. I think we need to learn from history the inferences we can see, in order to best prepare for the environment we are entering."