Top 10 trend predictions for 2018 by Ruchir Sharma
“These trend predictions will tell you how you can plan your investments and career in 2018…..!”
Want to know which companies to invest in in 2018, or what career moves to make – then here’s an insight to how the world will shape up in the coming year..
Ruchir Sharma, chief global strategist and head of the emerging markets equity team at Morgan Stanley, also the author of the International bestseller ‘The Rise And Fall Of Nations’, is back again (with an exclusive interview with Prannoy Roy on NDTV) – sharing his opinion on what India, and the world, will look like in 2018. From global growth to India’ unemployment issues, here are his trend predictions for the upcoming year.
- Global growth will soon peak – one of the most important trend predictions is about global growth. According to Ruchir, it will hit a high point, after which it will move in a downward trend. 2017 has been a standout year for the global economy, and to sustain such high levels in 2018 is unlikely. 2017 has infact, been the best year for the world economy when compared to any measurement metrics. This growth is not likely to last, as per Ruchir. A lot of this growth in the past few years has got to do with a surge in the global population. With that coming to a standstill, such levels of growth may not be sustainable in the coming years.
- Boom shaka laka in Europe – the situation is even better than what is perceived. Europeans have rediscovered their love for the EU, and nations want to be a part of the EU. The business optimism will only shine stronger in 2018.
- Good economics does not necessarily mean good politics – stock markets are going up, but, leaders’ popularity and approval ratings have declined sharply. Even in India, it may not be good politics either. Two-thirds of existing governments typically lose elections in India, historically speaking. Even governments that did well in the past, and were expected to be re-elected, 60% of them were thrown out!
- The ‘everything bubble’ – in 1980, the global financial assets value was equal to the global GDP. In 2017, the financial assets value is three-and-a-half times the global GDP. The valuations of most financial assets are inflated. The valuation of every asset category across the world is currently very very expensive. This makes us in a state of the ‘everything bubble’. According to Ruchir, all of this has been caused by very low interest rates.
- ‘Peak calm’ in stock markets – the average correction in the Indian stock markets is 18%, however, in 2017, the correction has been a mere 4% (similar is the case with USA stock markets as well, with an average correction of 10%, and 2017 correction of a meagre 3%). Never has the correction in the history of stock markets in India been so low. Low interest rates and excess liquidity has led to this. Now, interest rates across the world are tending to rise, and so, this calm will be disrupted in 2018!
- Tech: as good as it gets – tech is currently ruling the world. The biggest 5 companies in the world are all tech as of now (Apple, Google, Microsoft, Amazon, Facebook). Just the value of these 5 is more than the market value of the entire Indian stock markets. This is one of the most impactful trend predictions for the entire human race. It isn’t too far that robots may actually be controlling the world!
- ‘Big’ dominates like never before – big firms today are more dominant than ever before. It seems like, even in 2018, size will definitely matter. Termed as ‘superstar economy’, the better you are, the more are your chances of getting even bigger. If you have an advantage of being big, it is only likely that you will get even bigger.
- India’s 3 concerns – current account deficit (from being 5% in 2013, it went to 1% in 2017, now its going back up again, which is worrying. This is mainly due to oil prices rising again and poor export numbers), budget deficit (it came down from 5% in 2013, to 3.3% in 2017, but again, is now moving in an upward direction) and inflation (from 10% in 2013, to 2% in 2017, it is now again rising).
- Indian companies best-in-class – “Indian companies are growing fastest in terms of their strike rates… 51% companies in India have doubled their value in five years,” says Ruchir. India currently has the best strike rate (i.e., companies delivering very steady earnings growth (more than 15%) and return on equity (again, more than 15%) in the past 5 years).
- Peak distraction – smartphone addiction is gripping the world. “Beyond a point, too much technology is counter-productive. Because of this maybe people’s productivity has decreased,” says Ruchir Sharma. “Research says an average iPhone user looks at it 80 times a day… But the good news is there’s increased consciousness of that… A lot of people are using the term digital detox.” Digital detox is now the new Yoga!
How much of these trend predictions hold true, well, only time can tell!
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