Geopolitical fragmentation and economic competition

Countries like the Gulf oil states, India, Brazil, Vietnam and Mexico have valuable resources and supply chain inputs. We think they will align based on national interests – further rewiring supply chains and industrial policy.

Without significant tech-driven productivity gains, a preference for national security and resilience over economic efficiency will likely result in lower growth and higher inflation.

We think economic growth will be more volatile and more vulnerable to shocks.

Industrial and protectionist policies could spur investment in areas like technology, clean energy, infrastructure and defense – potentially creating opportunities. Yet economic costs could rise longer term, particularly in emerging markets.

Investors will need to be more cautious in targeting themes set to benefit from these trends, we think.