As the new year dawns, it is natural to look ahead and ask ourselves what 2023 has in store. Annual predictions are notoriously unreliable, so I will spare the short-term crystal ball. What can be said with some certainty is that three decades-long trends are undergoing reversals. And the new realities that are taking their place have started to raise important questions for investors.
Deglobalization
For most of the past 50 years, globalization has been the wind in the sails for companies and investors with a multinational footprint. The KOF Swiss Economic Institute tracks globalization and shows a remarkable and steady rise in globalization over the last several decades. From 1970 to 2019, the de jure globalization index nearly doubled. Thanks to China’s gradual opening to western business, the fall of the Iron Curtain, the rise of the BRICS nations, and a broad openness to free trade.
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