Thursday, December 7, 2023

Global disruption and proxy wars lie ahead, says top analyst

Neal Wallace
Countries ‘will have to choose sides’ in US-China economic battles.
Change is coming, warns Jan Lambregts, Rabobank’s head of global economics and markets. Photo:Rabobank Australia
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The world is entering a phase of disruption and geopolitical pressures that could lead to a new world order.

So says Jan Lambregts, Rabobank’s head of global economics and markets in the UK.

He said the world is a very different place to what it was a few years ago and some of those changes could be permanent.

He gave a list of his 10 global macro-economic trends, ranking artificial intelligence, crypto and the current global power struggle, which could re-order the world, at 10, nine and eight respectively.

In addition to the Ukraine-Russia conflict, he said there is a proxy economic war underway between the United States and China that could potentially define the 2020s.

“Everyone will have to choose sides.”

That includes New Zealand, whose biggest trading partner is China.

An ageing population and tight labour markets are two further trends that, when combined with the new world order, will require new global industrial policies, Lambregts said.

Those policies need to reflect greater resilience, national security and protections, and encourage more protection for the environment.

“We will need a new plan as the world is reordered.”

He said there is a demographic surge in Africa and the Middle East but a collapse in OECD countries and China,  which will impact geopolitics.

In 2000, birth rates in the US and Brazil averaged more than two children per woman. 

By 2020 they had dropped to less than 1.7. In China the birth rate has fallen over that period from 1.6 to almost 1.4.

Rising inflation and interest rates will be an issue for some time and he warned that, with the World Trade Organisation effectively side-lined, future global trade is going to look more like the past “and it won’t be a level playing field”.

His second top trend was “isms” and “who/what will be top of the populism?”

Lambregts said this trend will be reflected in countries choosing between local and global political and economic systems or where they settle on the spectrum from anarchism to imperialism.

Climate change was his No 1 trend, and he asked what this means for  investment in fossil fuels and green alternatives.

Nick Fereday, Rabobank’s executive director of food and consumer trends, added to that list, saying several years of global disruption have tested and altered supply chains.

While inflation and the soaring cost of living are significant, he said consumers are displaying brand loyalty and still buy their preferred items.

Global food companies are getting bigger and stronger but another trend is the increasing number of people working from home.

In the US, 5% of paid workdays were from home before covid. That figure now 30%.

The plant-based protein industry has stalled, with sales flat or declining, with “consumers … being asked to pay a premium for a product that has inferior taste and nutritional value”.

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