As we enter the last quarter of 2021, with the pandemic seemingly under manageable control in the developed world and restrictions easing to allow the rebuilding of economic activity, attention is returning finally to the many global economic imbalances and geopolitical tensions that preceded the pandemic. Many of these have been exacerbated by or during the pandemic, leading to a complex investment environment to navigate.

Economic imbalances are widening because of the shockingly low vaccination rates in developing countries undermining global economic activity. Supply chains are under strain as they are restructured for security of supply and as pent-up demand exposes shortages of critical components such as microchips; and inflationary pressures abound in freight, logistics, energy and food processing to name but a few industries.

In this environment, central banks’ confidence that such pressures are transitory will surely be tested, with timing expectations of interest-rate rises now being brought forward. In recent economic cycles, Chinese growth has often been a strong tail wind for the global economy as a whole, but at the moment China’s growth is slowing. Its property sector, long an engine of that growth, is under severe over-indebtedness strain.

As we approach the COP26 climate summit in Glasgow, the urgency of climate change mitigation policies is ever more apparent, but without a clear line of sight as to how the cost of these policies can be made politically acceptable, including justifying transfers to support lower-income countries in their transition planning.

Yet there are also encouraging signs. Much has been learned during the pandemic around working practices both for companies and individuals that can drive the productivity needed to afford the higher-wage economies that we now see emerging from it. The transition to a lower-carbon future will involve huge investment in skills, technology and in fundamental science and its application. In addition, it will also require smarter infrastructure and training to change behaviors.

Our industry has a huge role to play in raising awareness, evaluating companies’ transition plans and holding management to account. All this will ensure that our investment activity is targeted at supporting the sustainable productive capacity that will create the lifestyle opportunities we aspire to pass onto future generations. We should be emboldened by the incredible success of the vaccine development programs that illustrated public-private cooperation at its best. COP26 will be the focal event through which to evaluate how serious global ambitions are and we look forward to playing our part in delivering the desired outcomes.

Finally, while there are clear strains, the emerging mass-affluent consumers in Asia, led by China, are set to provide a baseload of economic growth that will drive investment opportunities globally for those prepared to undertake the thorough sector- and company-specific research needed to identify long-term winners. An interesting time lies ahead.

In this edition of Global Outlook, my colleagues Richard Dunbar and Jeremy Lawson once again provide their latest economic and market analysis. They discuss the reasons behind recent market volatility and why investors must "hold the line" amid growing uncertainties.

Bob Gilhooly writes about how changing demographics in emerging markets will affect inflation and interest rates. He also shows how healthcare could be a beneficiary of future investment flows.

Gillian Chivinge and Nicole Bellington elaborate further on how Covid-19 and long-term demographic trends have combined to change the healthcare landscape and they explain what this will mean for investors.

And finally, Sree Kochugovindan and David Zhou look at how Japan’s new prime minister will likely affect policies and the risks that could disrupt "business as usual."



Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.

Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed and actual events or results may differ materially.