Schroders: Global economy expected to continue disinflation route

The eighth annual Schroders Investment Symposium recently took place in Johannesburg, shedding light on the future of the global economy and the key factors shaping it. Kondi Nkosi, Country Head for South Africa at Schroders, discussed the central themes and key takeaways from this year's symposium, which revolved around a framework known as the 3D reset. This innovative concept encompasses deglobalisation, decarbonisation, and demographics, offering a long-term perspective on the trends set to impact markets for years to come. Deglobalisation, the first 'D' in the reset, has been accelerated by geopolitical tensions even before the COVID-19 pandemic. The crisis further heightened companies' focus on supply chain resilience over cost-efficiency, leading to trends like on-shoring and near-shoring. This shift has clear implications for investment markets and economies, creating winners and losers in the process. Asset managers must navigate these changes to adjust client portfolios effectively. In addition to deglobalisation, decarbonisation and demographics play crucial roles in shaping the global economy. The move towards greener energies and the necessary investments to achieve net-zero targets by 2050 will drive inflation levels. 'Greenflation' is a term that underscores the inflationary pressures associated with decarbonisation efforts. Furthermore, changing demographics, including diminishing population growth and resulting wage pressures, are expected to contribute to inflation as well. Looking ahead, Nkosi highlighted the importance of investment in production-boosting technologies such as artificial intelligence and robotics. These advancements offer opportunities for companies to enhance efficiency and productivity, mitigating the impact of rising wage costs. By strategically investing in technology, asset managers can position their clients to benefit from the evolving economic landscape. The symposium's discussion on the 3D reset framework provides valuable insights for investors and policymakers as they navigate the complex interplay of deglobalisation, decarbonisation, and demographics in the global economy. Understanding these long-term trends is essential for effectively managing risks and capitalizing on emerging opportunities.