Investment in artificial intelligence (AI) and related sectors will support global growth and ensure that a US slowdown does not turn into a recession. There are also reasons for optimism about Europe’s outlook. Meanwhile, growth in China, India and emerging markets overall will continue to be resilient.
 
Elevated equity valuations may therefore persist, but we are keeping a close eye on the risk that profits may start falling short of lofty expectations. Monitoring such risks is vital given the potential for shocks from a new geopolitical order whose hallmarks are rivalry in a range of domains, but cooperation on select issues, such as climate change or AI safeguards.
 
This backdrop will complicate the outlook for inflation. This is less of a problem in the euro zone, where we expect the European Central Bank to hit its inflation target. But US inflation will remain higher for longer.

You can now read the full whitepaper at the link below