As the global economy recovers from its pandemic scars and inflation makes its first comeback in decades, the world is preparing to face its greatest ever challenges: the energy transition to fight the inexorable climate crisis and the development of an inclusive growth model. We believe that 2022 will be a pivotal year in this respect, encompassing a huge mobilisation of resources to succeed in both of these challenges. Meanwhile, some of the paradigms that have characterised the previous decade will appear outdated.
The paradigm of austerity at all costs is a thing of the past, and not only as a response to the Covid-crisis disruptions. Huge fiscal stimulus, along with private capital, is crucial for the ambitious investment needed to reach Net Zero emission targets by 2050 and to manage the transition. The energy crisis we are living in today is adding more fragility to an already unequal society, and governments need to act. Central Banks’ independence will come into question, while dealing with multiple targets (inflation, growth, unemployment, green, inequality). The mantra of «too much of everything» (overcapacity) is also debunked as scarcity is all around: commodities (food and energy), a skilled workforce and alternative supply chains to mention a few. This comes alongside the end to the old wave of globalisation and the emergence of China as global power (in terms of consumer demand, climate action, geopolitical equilibria), rather than being a mere low cost manufacturer.
All this translates into three major themes for investors in 2022: first, inflation, at a time when economic growth starts to slowdown; second, the de-synchronisation of fiscal and monetary policies across the world, along with the impacts of the slowdown in China; third an acceleration of ESG integration into portfolios. We will help you rethink your portfolios through these lenses, and to explore the opportunities that will arise in this new investment regime.