After many years of fruitful relations with the Indian Institute of Finance (IIF), it is real honor and pleasure for me to have another speech for teachers and students at the very successful academic institution of the IIF. I am speaking also in honor of the late professor J.D. Agarwal, the founder of the IIF.<\/p>\n
In many respects, the world has entered a period of disorder. We are confronted with wars, radicalism, political turmoil, protectionism, poverty, suffering refugees, egoism, political extremism and populism, lagging and economically weak and unstable countries – and all this simultaneously. But I also feel happy about India\u2019s progress in the past few decades – and wish\u00a0 this important catching-up country all the best for the future.<\/p>\n
Below, I will sum up six factors of hope<\/strong> and<\/em> ten factors of <\/strong>concerns<\/strong> (without ranking) that currently occupy my reflections a lot. Obviously, it is easier these days to put together the factors of concerns – but hope and (future) opportunities should not be neglected either. This latter conclusion is important for both financial markets and the corporate sector. We hereby touch briefly on behavioral finance and behavioral economics. Positive or encouraging psychological contributions may play an important role in bad times to develop turning points in the right direction; of course based on fairly realistic expectations.<\/p>\n \u00a4 <\/strong>The war in the Ukraine<\/em><\/strong>. \u00a4 <\/strong>China\u2019s economic and financial development. \u00a4 <\/strong>China\u2019s political development.<\/em><\/strong> \u00a4 The U.S. after the next presidential election. \u00a4 <\/strong>The political development of the EU. \u00a4 <\/strong>The economic development and reforms in the EU. \u00a4 Insufficient reforms in emerging markets. \u00a4 <\/strong>Energy and water shortage in rich and less favored countries. \u00a4 Further increasing protectionism. \u00a4 <\/strong>Last but not least: turmoil on global financial markets. \u00a4 Politics – bad political leaders may be replaced sooner or later. \u00a4<\/strong> Increasing global insight of climate improvement needs. \u00a4 Global insight that education is a growth-driving need. \u00a4 Emerging markets receive growing political attention. \u00a4 Gender equality is improving globally (but still too slowly). \u00a4 AI means a lot of hope – but also unpredictable risks. Altogether, <\/em><\/strong>2024 will be an extremely important political year with lots of economic implications and consequences.<\/em><\/p>\n <\/p>\n Hubert Fromlet<\/em><\/strong> <\/p>\nFactors of concern<\/h3>\n
\n<\/em><\/strong>The Russian war in the Ukraine still goes on as a psychological (human) and financial burden, mainly for the U.S. and Europe.<\/p>\n
\n<\/em><\/strong>China\u2019s economy and the financial development remains a conundrum that creates uncertainty and concerns because of lagging transparency.<\/p>\n
\n<\/strong>President Xi Jinping\u2019s autocratic leadership style does not provide China with good predictability – neither when it comes to the economy nor to politics (e.g. vis \u00e0 vis the U.S., Taiwan)<\/p>\n
\n<\/em><\/strong>The unpredictable Donald Trump as a possible new president scares me a lot.<\/p>\n
\n<\/em><\/strong>The EU will have elections in its member countries in 2024 – with good chances for the extreme right as a big concern for EU unity.<\/p>\n
\n<\/em><\/strong>Further nationalism in the EU would impede reforms and growth.<\/p>\n
\n<\/em><\/strong>Most emerging countries still need a lot of reforms. An open question may be to what extent China\u2019s growing political influence in many emerging countries impact on market reforms.<\/p>\n
\n<\/em><\/strong>Global water shortage worries me a lot – but also uncertain and uneven global energy supply.<\/p>\n
\n<\/em><\/strong>Here we have a risk of further reduced global trade expansion and economic growth.\u00a0 <\/em><\/strong><\/p>\n
\n<\/em><\/strong>Negative surprises on global financial markets may \u201calways\u201d be on the cards. As an obvious potential risk, I may particularly mention all the (hidden) financial imbalances in China but also potentially bursting financial bubbles elsewhere.<\/p>\nFactors of hope<\/h3>\n
\n<\/em><\/strong>At least in working democracies, one may hope that bad political leaders some day will be replaced by more competent successors.<\/p>\n
\n<\/em><\/strong>This is a factor where improvement is visible (but still too little).<\/p>\n
\n<\/em><\/strong>There is a growing insight around the world that the creation of new human capital is a main factor for stronger potential growth.<\/p>\n
\n<\/em><\/strong>Here, we can currently watch an important development that does not look perfect but will gradually improve self-confidence of many emerging countries, particularly in the so-called South.<\/p>\n
\n<\/em><\/strong>Progress happens in many countries. More still can be done. Nice to see that we in 2023 got another female Nobel Prize Winner with Claudia Goldin.<\/p>\n
\n<\/em><\/strong>AI is currently expanding very quickly – creating a lot of new opportunities, particularly in medical research and diagnosis. However, AI risks should not be neglected one single day.<\/p>\n<\/p>\n
\n<\/em>Affiliate Professor at the School of Business and Economics, Linnaeus University
\nEditorial board<\/a><\/p>\n