Doubts about the sustainability of growth
In last month’s issue, we outlined our fundamental analysis of where capital markets were likely to be heading in the first half of the next decade.We described our three- stage analytical process, the final phase of which involves pinpointing and understanding structural breaks that might affect economies or markets and assessing knock-on effects for financial markets. Examples of such structural end-stops would be the demise of the BrettonWoods currency regime in 1971, the fall of the Berlin Wall in 1989 or the advent of European economic and monetary union in 1999. Each of these in their own way had far-reaching and permanent repercussions. No in-depth analysis of the outlook can be regarded as comprehensive unless the impact of such structural shifts is properly taken into consideration.
So, where does the world stand now? What paradigm shifts can be detected? The answers to these crucial questions are the key to underlying trends likely to have a critical bearing on investment strategy over the next few years.