COVID-19. War in Europe. Inflation. Geopolitical uncertainty. Global business leaders have had a lot to deal with in the last few years, and they cannot assume the future will be any easier or more familiar. Rather, the economic, banking, and investment landscape of the next decade is likely to look materially different from the recent past.
Economically speaking, the 21st century has been unusual. The “global balance sheet” is an accounting of the whole world’s economy—counting up the assets and liabilities of households, corporations, governments, and financial institutions. Before 2000, the balance sheet grew in tandem with GDP. Since then, the assets on the balance sheet have increased far faster than GDP, as assets like equity and real estate created $160 trillion in paper wealth. In effect, a glut of savings couldn’t find productive outlets in the real economy, so investment was low. That contributed to sluggish growth, low global inflation, and declining interest rates.
