Artificial Intelligence (AI) and geopolitical instability are going to cause a "Great Rewiring" of the global economy – across trade, capital and production – which could reshape markets over the next five years.
That was the premise of Robeco's 16th edition of its five-year outlook, 'Expected Returns 2027-2031', this year titled The Great Rewiring.
In the paper, Robeco said that "just like human brains which rewire themselves when faced with disruption, the global economy is building new pathways, rewiring trade, capital and production". The paper focused on how the effects of macroeconomic instability and the effects of AI and inflation could shape changes in government bonds, emerging markets and a host of other important asset classes.
"Last year we argued that the world was entering a 'Stale Renaissance': a period in which extraordinary technological progress coexisted with a drag from elevated economic policy uncertainty," said Peter van der Welle, Strategist, Multi-Asset Solutions at Robeco. "This year we remain firmly committed to the Renaissance part of that thesis, but are now inclined to nuance the 'stale' element."
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