One major consequence of the global pandemic has been the transition from a world led by neoliberal principals, which is characterised by fiscal conservatism and falling inflation, to a world of state-sponsored capitalism, where expansive fiscal and monetary policies work together to reduce inequalities, ultimately reflating developed economies.

Many of the developments in 2022, including heightened geopolitical tensions, high inflation and rising interest rates, could indeed be interpreted as signs of new trends kicking in. However, as extreme as these short-term developments are, their usefulness for predicting long-term trends remains limited.

Origen: Secular Outlook 2023 – the end of the peace dividend

Globalisation is not dead

We believe that, despite the two countries’ rhetoric and strategic ambitions, the US and China are simply too economically interlinked to allow for an abrupt and broad break in their trade relations.

Yves Bonzon, Group Chief Investment Officer

…we believe that deglobalisation will ultimately be limited is that the world is multipolar, as opposed to bipolar. Today, some countries clearly prioritise their own objectives in favour of habitually adhering to one block or another. A multipolar world order is fertile ground for geopolitical mishaps; however, it is also an environment where beneficial diplomatic and trade relations are harder to stamp out and one that speaks for a slowdown in global trade, rather than its outright decline. 

End of low rates?

Given the exponential value of financial assets in relation to global gross domestic product, changes in asset prices still disproportionally influence the real economy.

Yves Bonzon, Group Chief Investment Officer

…the sheer volume of financial assets and global debt would not allow for a continuous rise in interest rates and yields, as its potential to cause systemic problems is too high. Actually, the best tools for eroding the global debt burden while avoiding a disorderly collapse of debt are low interest rates combined with higher, but contained (i.e. between 3% and 4%) inflation. 

Towards a commodity super cycle?

All in all, this temporary imbalance between growing demand and simultaneously declining supply leads to a very strong structural outlook for copper in the coming decade.

Yves Bonzon, Group Chief Investment Officer

Despite China slowly moving from boosting to breaking copper demand (Chinese copper demand is expected to peak in 2030), the energy transition will be its single strongest driver until the middle of the century, which will lead to a continuously growing global copper consumption.

Looking at the supply side, we expect to see a significant slowdown in mine-supply growth from the middle of the decade before an acceleration of scrap supplies due to a faster recycling cycle for electric-vehicle batteries will finally be able to offset this gap.