World Economic Forum’s Post

As investors with a global, cross-sectoral footprint, private equity (PE) firms find themselves facing new risks and new opportunities in a changing geopolitical and trade environment. BCG’s Center for Geopolitics examines these risks and opportunities in a new article that identifies the sectors most likely to be vulnerable and recommends strategies for risk management. Read “Private Equity Adapts to the New Normal in Geopolitics and Trade” here https://lnkd.in/dPNJkJ9u. #geopolitics #privateequity #BCGCenterforGeopolitics

As investors with a global, cross-sectoral footprint, private equity (PE) firms find themselves facing new risks and new opportunities in a changing geopolitical and trade environment. BCG’s Center for Geopolitics examines these risks and opportunities in a new article that identifies the sectors most likely to be vulnerable and recommends strategies for risk management. Read “Private Equity Adapts to the New Normal in Geopolitics and Trade” here https://lnkd.in/d2jSBs8X. #geopolitics #privateequity #BCGCenterforGeopolitics

As investors with a global, cross-sectoral footprint, private equity (PE) firms find themselves facing new risks and new opportunities in a changing geopolitical and trade environment. BCG’s Center for Geopolitics examines these risks and opportunities in a new article that identifies the sectors most likely to be vulnerable and recommends strategies for risk management. Read “Private Equity Adapts to the New Normal in Geopolitics and Trade” here https://lnkd.in/d9Drs5FB. #geopolitics #privateequity #BCGCenterforGeopolitics

One of the great priviledges of having served in government includes the opportunity to continue contributing to the policy conversation on the great issues of the day through various think tank affiliations. Recently, I teamed up with my former Treasury colleague (Christine McDaniel) to provide some analysis and research regarding the rapidly shifting global trade policy paradigm. You can find our paper below. Thank you to Peter Rashish, Dan Mullaney, and others for your thoughtful comments and feedback on an early rough draft. https://lnkd.in/eeZZViEZ

🌍 The Shifting Dynamics of Global Trade: Key Insights for Investors The global trade landscape is undergoing a profound transformation. As the world moves away from free trade and openness, geopolitical tensions—particularly the intensifying US-China rivalry—are ushering in an era of Modern Mercantilism. In this system, trade is increasingly perceived as a zero-sum game: one nation’s gain equates to another’s loss. 🔑 Key Trends to Watch: Rising Protectionism: Economically powerful nations adopt protectionist policies to safeguard their interests. 🎯Targeted Taxation: Profits generated by multinational companies in foreign markets are becoming prime targets for local governments' taxation. 📊 Implications for Investors: These shifts signal potential changes to earnings streams for those invested in multinational corporations. Governments may impose stricter controls or higher taxes on foreign profits, impacting corporate profitability and shareholder returns. 💡 The Takeaway: The rules of global trade are evolving rapidly. As protectionist measures and geopolitical competition reshape the global economy, understanding and adapting to these dynamics is crucial for navigating this new landscape. 📣 How are you preparing for these changes in global trade? Let’s discuss. #GlobalTrade #Geopolitics #Investing #ModernMercantilism

Unfortunately, economic policy uncertainty extends beyond fiscal considerations. The gradual dismantling of our multilateral trading system is another key concern. More countries are now going their own way, imposing unilateral tariffs or industrial policy measures whose compliance with World Trade Organization rules is questionable at best. Our imperfect trading system could be improved, but this surge in unilateral measures isn’t likely to deliver lasting and shared global prosperity. If anything, it will distort trade and resource allocation, spur retaliation, weaken growth, diminish living standards, and make it harder to coordinate policies that address global challenges, such as the climate transition. Instead, we should focus on sustainably improving medium-term growth prospects through more efficient allocation of resources within and across countries, better education opportunities and equality of chances, faster and greener innovation and stronger policy frameworks. Macroeconomic forces—desired national savings and domestic investment together with global rates of return on capital—are the primary determinants of external balances. Should these imbalances be excessive, trade restrictions would be both costly and ineffective at addressing the underlying macroeconomic causes. Trade instruments have their place in the policy arsenal, but because international trade is not a zero-sum game, they should always be used sparingly, within a multilateral framework, and to correct well-identified distortions. Unfortunately, we find ourselves increasingly at a remove from these basic principles. As the eight decades since Bretton Woods have shown, constructive multilateral cooperation remains the only way to ensure a safe and prosperous economy for all.

Difference Between Decoupling And De-risking In International Trade Decoupling refers to a complete separation of ties between two or more economies. It involves dismantling existing trade and investment relationships, severing supply chains, and establishing new economic partnerships elsewhere. De-risking refers to the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk. De-risking is a more nuanced and gradual approach that focuses on mitigating specific risks associated with economic engagement with a particular country. It involves diversifying supply chains, identifying alternative sources of goods and services, and implementing measures to reduce exposure to potential disruptions. Like decoupling, de-risking is motivated by a desire to reduce reliance on a single supplier or to protect against potential economic or geopolitical events. But, unlike decoupling, de-risking seeks to continue basic trade and investment activities — once the risks have been dealt with. Thanks for reading….

How were businesses worldwide impacted by the rise in trade protectionism beginning in 2017 and 2018? We set out to answer these questions in our chapter of Verisk Maplecroft‘s newest Political Risk Outlook: https://lnkd.in/g7VRZNCJ #tariffs #protectionism #geoeconomics #tradewar

How Will a 2024 Trump Victory Shape the Financial Markets? In today’s fast-moving investment landscape, staying prepared for political shifts is essential. Vestrado's latest analysis explores the potential "Trump Trade Effect" and the market changes we may see. Gain strategic insights to better position your portfolio in an evolving economic climate. Read the full analysis here: https://lnkd.in/gksempjp #MarketInsights #Election2024 #InvestmentStrategy #Vestrado

Our latest report, commissioned by LSEG and written by Fathom Consulting, considers the evolving landscape of global trade, with a focus on ‘de-risking’ and its potential impact. Honing in on the US-China trade dynamics, the white paper offers a closer look into the potential shifts in trade patterns. Read now: https://lnkd.in/eaBEwHJY