Saving means making a pact with the future: consuming less today to build prosperity for tomorrow. This pact only holds if savings can be channelled into investments that generate growth and if their value is preserved. Geopolitical tensions, the energy shock and the spread of artificial intelligence (AI) are putting both conditions to the test. Inflation is eroding the value of accumulated wealth, higher interest rates are changing its remuneration, and innovation is reshaping the opportunities and risks associated with its investment.
1. The global economic outlook
The conflict in the Persian Gulf and its impact on the energy markets are affecting the global economy. The closure of the Strait of Hormuz has driven fuel and gas prices to historically high levels, weighing on household budgets and driving up costs for businesses. Inflation has picked up again. The energy shock is now the main risk to the global economy.
Yet production has proved more resilient than expected, largely thanks to the boost that AI has provided to international trade, investment and equity prices. It is a revolution that is set to transform our economies and societies, and at the same time it is a competitive arena in which major powers vie for control of semiconductors and rare earths, and for access to energy.
However, this engine of growth is also a significant source of risk. Recent corrections in the equity prices of tech companies show just how rapidly expectations about the profitability of investment in AI can change.
Another risk to growth and financial markets is the pronounced increase in long-term government bond yields across the main economies (Figure 1). This reflects expectations of persistently high inflation and of tighter monetary conditions; delays in the necessary fiscal adjustment in several countries; and the large-scale issuance of long-term securities by big tech companies, which intensifies competition for funding.
