Will Robots Rule Or Ruin The World Economy?

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Robots are taking over the world and replacing thousands of jobs and shaping a new economy.

Even journalists are losing jobs to automated writers.

International news agency Reuters has admitted 400 stories a day are written by computers and in most cases, they are faster and produce better copy than their human counterparts.

Technology allows Reuters to load company report and market data into pre-written templates for review by human editors, and few readers have noticed the difference in quality.

But robots – or machine automation – is more far-reaching in the economies of developed countries where labour is limited and expensive for even highly skilled posts.

Rise of the machine

The US and Europe has seen thousands of jobs shed in the past decade to robots.

Manufacturing and service jobs alike have fallen to the rise of the machine.

Most at risk are low-paid jobs.

The victims are customer service staff as help moves online, skilled jobs in heavy industries, like car making, electronics and warehouses where repetitive task are handed to technology.

A recent report by fund managers Schroders suggests automation is improving productivity.

“If the future is brighter, and automation helps the global economy emerge from its current malaise, developed bond yields should finally break out upward from their five-year range, and improved sentiment could even drive buoyant, demand-driven, inflation. In a sense that would represent an amplification of the “reflation trade” witnessed following the election of President Trump,” says the report.

Risks for investors

“This should be a very good environment for developed world risk assets, with commodities and inflation-protected assets also doing well. It would certainly warrant an underweight (or short) position in developed world bonds.

“To determine which way the wind is blowing, investors will need to keep a close eye on how policymakers and the beneficiaries of automation rise to the challenge of spreading its financial benefits more widely and be ready to act accordingly.”

But this comes with a warning – the markets could fluctuate between the economic malaise of high unemployment and inequality or a boom in productivity boosting output.

“From an investment perspective, techno-dystopia represents a world where many of the current issues facing the global economy – weak demand, subdued inflation, low wage growth and inequality – are intensified,” says Schroders.

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