BlackRock Investment Institute

Geopolitical fragmentation and economic competition

Geopolitical fragmentation and economic competition is one of the five mega forces that we track. Globalization is being rewired as the world splits into competing blocs.

 

Explore this interactive page and stay abreast on the top 10 geopolitical risks and their potential impact on markets.

View our Geopolitical risk dashboard View our Geopolitical risk dashboard
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Rewiring global supply chains

The Ukraine war and strategic competition between the U.S. and China have ushered in a new era of competing geopolitical and economic blocs. This marks a departure from the post-Cold War era of steadily increasing globalization. We see countries favoring national security and resilience over economic efficiency, accelerating the rewiring of supply chains. As competing blocs firm up, multi-aligned countries are likely to grow in power and influence. A surge of investment in tech, energy, infrastructure and defense could create opportunities.

Multi-aligned countries

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.

Growth and inflation

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.

Investment implications

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.

Grabbing the wheel: putting money to work

The new regime of greater volatility is full of opportunities. Seizing them requires a dynamic and selective approach that blends the economic outlook with mega forces and more.
Read our outlook Read our outlook
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