When it comes to charting the world’s economic future, the old rules no longer seem to apply. The U.S. is putting the weight of the federal government behind a reindustrialization drive at the same time China’s economy is sputtering and Japan is rekindling growth, all while the world taps the brakes on a decades-long era of globalization.
The trade relationship between the U.S. and China is also changing along with the global economy, as competition between the world’s two largest economies intensifies. In Europe, Germany scrambled to avert an energy crisis after the war in Ukraine began, but the region’s largest economy is feeling the ill effects of rising power prices and investments in new factories on the other side of the Atlantic.
With this evolution in global trade and economic policy comes a heightened sense of uncertainty over the outlook. The challenge facing institutional investors is twofold: rethinking forecasts for a new economic era and managing risk—and unintended consequences—as trade policy takes a different course.
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