Sri Lankan born economist predicts global recession next year


Nov 06, 2015 (LBO) – Sri Lankan-born economist Howard Nicholas on Thursday warned that the world will have to face a recession by next year.

Speaking at the 36th National Conference of Chartered Accountants in Colombo Nicholas, who is a senior lecturer of Rotterdam Erasmus University, argued the world is now near the bottom of a long business cycle.

A business cycle is basically defined in terms of periods of expansion or recession.

In technical terms a recession can be defined as two quarters of negative growth and depression is commonly defined as a more severe version of a recession.

There are three types of cycles and the K wave represents the long business cycle referred by Dr Nicholas.

“Most analysts think we are near the bottom and we are about to begin a new upward pace of the cycle. I tend to agree,” Nicholas said.

“Some analysts say that we already passed the bottom and we are going upwards now; I disagree.”

Nicholas whose views are widely respected among economists said one important phenomena identified with the long cycle is the dominant economic power that had to change near the bottom of the long cycle.

“In 1930’s we see the emergence of the United States as the world dominant power. The question is; are we now witnessing the next dominant power in the world.” he questioned.

Nicholas who denounces classical economics as being unrealistic said the global economic power has now shifted from US and Europe to East Asia.

“The share of global GDP in US and Europe has shifted to East Asia. Companies are seeking to relocate its businesses even from China to other East Asians countries.” he said.





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Nirmalan Dhas
Nirmalan Dhas
6 years ago

With 15 years to go to the peak of the current long cycle and another 10 years before we hit the bottom of the trough of the same cycle…where will the recession come from…? My bet is that we in Sri Lanka will see a sharp increase in wealth between now and 2017 followed by a gradually slowing climb till 2030. That is 15 years within which to prepare for the “downturn” that will follow. This downturn will be felt as a tightening of competition with profit margins and disposable income falling and very expensive and high levels of lifelong education and training becoming necessary to secure and sustain employment. Certainly tough. But not the end of the world.

However those of us who want to hang onto this Sinhala Nation and Tamil Nation dreams will end up in the jungle…possibly fighting each other with enough arms being thrown their way to keep them busily engaged in their gruesome games and out of the way of the others. Those who can keep their Sinhala Buddhism and Tamil Hinduism at home and function in English Agnosticism and a Cosmopolitan culture will be ok for the foreseeable future…so stop taking gobblydegook and join the cosmopolitan world of the future…if you dare!

6 years ago
Reply to  Nirmalan Dhas

Yew. We are now in a recession. Gvt Try to overcome it, But seems to fail as they look for remedies in seconds

6 years ago

Sri Lankas’ problems are much more convoluted and worse than most people imagine. The problems go far beyond simply Sinhala and Tamil issues. Sir Lanka has a structural issues in social, political, and economic realms. Cataclysmic structural issues in Social realm with respective to problem/solution identification and providing remedies. Sri Lankans by nature are reactive and given a choice prefer mediocrity. Its’ deep rooted malice. Economic problems are solved by reactionary policies. Lets take the balance payment crisis presently undergoing . The LKR is collapsing 129-130 to 145-146 . One policy – cancel all the vehicle permits . Is it a bad policy decision ? I would say giving permits to begin with was a mad policy . The permits induced consumption of foreign goods by subsidizing them . In otherwards the policy precipitated the current crisis. A 40BN LKR waste , so what economic thinking was behind it to begin with ?

Sri Lanka is yet to establish a mechanism that thinks and implements sound policy . Now Sri Lanka did have a mechanism called “the Civil Service” before 1970s but it was destroyed in stages, started by Madam Bandaranayaka and then finished off completely by JRJ .

Sri Lanka , will have muddle real rate growth till 2017-19 and that’s it. All real gains will be lost because SL has no mechanism to grow sustainably nor hold what she has gained . It will be slow collapse then it will accelerate with a youth uprising in 2027-30 period.

I hope people realize that issue is not with politicians . People want quick painless solutions and they elect people who promises them . Its with the people .SL needs 5-6 years of painful economic medication which will take another 10 years to take hold. Unpleasant as it is ; it is time to raise the hand take the fall for a better future or don’t raise the hand and fall anyway into the waiting abyss.