The world is fragmenting. This fracturing had already been underway with the emergence of China as a major economic and geopolitical player and Western governments’ sceptical stance toward China. The war in Ukraine and the responses to it are widening these geopolitical fractures and could accelerate the move from a unipolar world to a bipolar or multipolar world.
In our 2022 Secular Outlook, “Reaching for Resilience,” we discuss these and other key trends affecting the global economy, markets, and fiscal and monetary policies that inform our five-year outlook and portfolio positioning. This blog post summarizes our views.
We see an elevated risk of recession over the next two years, reflecting greater potential for geopolitical tumult, stubbornly high inflation that reduces households’ real disposable income, and central banks’ intense focus on fighting inflation first, which raises the risk of financial accidents on top of the sharp tightening of financial conditions already seen.
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