current
Economic Nationalism on the Rise
A trend towards economic nationalism is reshaping global trade, impacting inflation volatility and creating opportunities in specific sectors.
Timeframe
near-term
Detailed Analysis
While stopping short of full deglobalization, the report identifies a growing trend towards economic nationalism. This trend is characterized by a focus on national resilience, strategic planning, and support for domestic industries. "We acknowledge that the trend toward greater economic nationalism has resulted in the emergence of a multi-polar world with more fragmented trading blocs, but we reject the notion of deglobalization." This shift towards economic nationalism has several implications. It contributes to elevated inflation volatility, highlighting the importance of assets with positive inflation gearing. "We capture the impact of economic nationalism on inflation by maintaining an expectation for elevated inflation volatility over our forecast horizon." It also creates opportunities in sectors like commodities and real assets, which are expected to benefit from increased demand and inflation protection.
Context Signals
Focus on supply chain resilience and national security.
Risk of protectionism and trade wars.
Emergence of multi-polar world with fragmented trading blocs.
Edge
Opportunities for investors in commodities and real assets as inflation hedges.
Increased need for active management to navigate the changing global trade landscape.
Potential for regional investment opportunities within specific trading blocs.
