Economist Warns of Potential 2026 Economic Crisis

Jakarta, CNBC Indonesia – Economist Komal Sri-Kumar warns that 2026 has the potential to bring the worst economic crisis in half a century, and only a small number of assets are considered capable of surviving the pressure.

in an interview published on David Lin’s YouTube channel on December 19, the President of Sri-Kumar Global Strategies assessed that the world was heading towards stagflation. The combination of high inflation and recession, he said, had not been seen since the 1970s.

“We haven’t seen something like this as the 1970s. The reason why we are repeating it now is because stagflation requires conscious policy mismanagement for it to happen.And all the elements leading to stagflation are already in the 2026 outlook.So, all parties will be affected,” he said.

Komal Sri-Kumar is a global macro economist and President of Sri-Kumar Global Strategies, Inc., an investment strategy and economic policy consulting company based in the United States.

Previously, Komal had a career of more than two decades at Trust Company of the West (TCW) as Chief Global Strategist and Chair of the Comprehensive Asset allocation Committee.

Risk of High Inflation and Recession in 2026

Sri-Kumar estimates inflation will be above 3% in 2026, with the risk of recession increasing due to trade tariffs and weak demand.

He also highlighted the rise in long-term bond yields as a signal that the market expects inflation to remain persistent, even though the United States central bank (The Federal Reserve/The Fed) cuts short-term interest rates.

According to him, the increasingly steep yield curve could have consequences:

• Encourage an increase in housing credit interest rates
• Weakening household consumption

At the same time, the Fed’s two mandates are maintaining the stability of inflation and the unemployment rate, considered increasingly challenging to achieve.

The situation is complicated by the central bank’s signal that it