Summer Issue 2021 - 26

2021 ULI Virtual
Spring Meeting
The conference, held online May 10-12, included networking
opportunities and virtual tours of 11 properties in the United
States and worldwide.
Mohamed A. El-Erian
What's Ahead in the Global Economy?
Though people in a handful of countries
around the world-not least the United
States, the United Kingdom, and Israel-may
now feel that the worst is over when it comes
to the COVID-19 pandemic, economic uncertainties
and even perils still await if governments
and industry let down their guard. That
was the message from Mohamed A. El-Erian
in his keynote address to the 2021 ULI Virtual
Spring Meeting.
While no one in countries where vaccination
is proceeding apace wants to be anything
other than optimistic after the past year,
El-Erian's credentials are impressive enough
that his warnings should be taken seriously.
He is the president of Queens' College at the
University of Cambridge and since 2014 has
been chief economic adviser at Allianz, the
corporate parent of PIMCO, where he formerly
served as chief executive and co-chief investment
officer.
" Ironically, while all of us feel that we're
coming out of this dark tunnel-and it has
been very dark-we still have an uncertain
journey, " El-Erian told the online audience. " It
is critical that we do not repeat the mistake
of 2008. We won the war against a global
depression, although we came close to one,
but we didn't establish high, sustainable, and
inclusive growth. "
The result of weak growth in most economies
after the global financial crisis was that
26
URBAN LAND
SUMMER 20 21
Mohamed A. El-Erian, chief economic adviser at Allianz, warns of the danger of significant
inflation and calls for a more comprehensive policy approach that speaks to both the
supply and demand sides of the economy.
they entered the COVID-19 crisis with less
resilience than they should have, El-Erian
said. Consequently, as countries seek to build
their way out of the current emergency, governments
and companies need to ensure that
they have sufficient fiscal and financial firepower
to cope with an unexpected setback.
" It's really important [that] that mistake
should not be repeated, " said El-Erian. " We
need to acknowledge that consistently good
decision-making in this world is hard; the
probability of a mistake is high. No one wants
to make a mistake, but there's simply too
much fluidity in the system. So, understanding
your recoverability from mistakes is really,
really important. Minimize mistakes, but also
understand the nature of the mistakes you're
open to. "
The point, El-Erian added, is underlined
by the fact that few organizations, be they
public or private, initially understood how
long the pandemic would last. " When we
entered COVID-19, the thinking was, 'This is
a one-time shock, and we're going to come
out of it,' " he said. " COVID-19 was thought to
be like the financial crisis-a one-round game
where you get hit hard, you respond, and you
move on. "
He added, " Like poker, everything goes in
this one hand and that's it; you do whatever
it takes. Well, it turns out that COVID-19 is not
a one-round game; it is a multiround game. If
you're the U.S., you're able to deal with multiround
games, but other countries are not. So,
that is going to become more of an issue for
countries and for segments within countries. "
In particular, El-Erian is concerned about
the potential that the multi-trillion-dollar U.S.
stimulus package will trigger significant inflation,
evidence for which is already apparent.
" The Federal Reserve believes very strongly
that it will be transitory, " he said. " They are
absolutely committed to maintaining the loosest
financial conditions we've had. "
The U.S. government, El-Erian added,
clearly believes that such stimulus is necessary
in a multiplicity of different ways, but he
worries that it could yet be proved hubristic.
" What if the Fed is wrong? " he asked. " On the
demand side, you can no longer argue that
we have a deficiency of aggregate demand.
Public-sector demand is on turbo charge, and

Summer Issue 2021

Table of Contents for the Digital Edition of Summer Issue 2021