Ray Dalio lays out five forces shaping the global economy

SINGAPORE – US billionaire Ray Dalio has listed five major forces at the front and center of the world economy.

The founder of Bridgewater Associates said in a speech at the Milken Institute Asia Summit in Singapore that these five factors are interrelated and often cyclical. Dalio made the remarks Wednesday ahead of the Federal Reserve’s rate decision.

Dalio expressed concerns about how to manage the country’s debt as uncertainty remains over actions by the Federal Reserve at this week’s meeting.

“We’re going to change the Fed’s interest rates, and [what will] What about the whole dynamic? What happens to all the debt? How to deal with this?

The Federal Reserve kept its benchmark interest rate at its highest level in 23 years, causing the government to allocate $1.049 trillion for debt repayments, an increase of 30% from a year ago. This is part of a total expected payment of $1.158 trillion for the full year.

“What is its value as one person’s debt or another person’s asset? How is it as a store of wealth? These are important questions and urgent questions,” he posed to attendees.

“The second is the issue of internal order and disorder,” Dalio said, referring to U.S. politics in the run-up to the election.

He added: “There are irreconcilable differences between the right and the left due to the huge wealth and value gap… even the orderly transition of power is in question.”

Vice President Kamala Harris is now considered more likely to win than former President Donald Trump for the first time in the 2024 election cycle, according to a Federal Reserve poll released by CNBC on Tuesday.

Last week, candidates debated issues such as abortion rights, tariffs and other policy proposals.

Still, no matter who occupies the White House, the president’s policy agenda will have only a limited impact on the overall health of the U.S. economy.

Dalio listed geopolitics as his third concern: the relationship between the United States and China.

U.S.-China relations are affected by a range of ongoing tensions, such as territorial issues in the South China Sea, Taiwan’s political status and economic tariffs.

“I think there may be a fear of war – mutually assured destruction. But it’s chaos,” he later stressed, without pinpointing the specific ignition point.

Dalio later said that “natural disasters” have historically been a greater threat to humans and society than war.

“Natural disasters, droughts, floods and epidemics lead to more deaths and more changes in domestic orders and international orders,” Dalio noted.

He stressed that the costs of climate change are about to increase. According to the World Economic Forum, the climate crisis will cost global GDP 12% for every 1°C increase in temperature.

The billionaire said technology can be “fantastic” if people adopt and invest in it appropriately.

“The potential benefits to productivity are huge,” he said, elaborating that technology will create unicorns and that when it does, a small group of people will perform better.

He further said: “Whoever wins the technological war will win the military war.”

When Dalio evaluated the five factors overall, he concluded that “surprisingly, there were more downsides than upsides,” he said.