Global Overview: Navigating a Year of Elections

In an intricate dance of interdependence, markets and the real economy influence each other significantly, with markets often setting the pace. Asset booms—particularly in stocks and property—have underpinned consumer spending in economies such as the US and India. Yet, as America’s pandemic stimulus fades, a market recalibration seems imminent. Interest rates in the US appear to have peaked, narrowing the appeal of dollar-denominated assets, while Japan’s recent rate hike unfurled a volatile market response, hinting at turbulence on the horizon as the yen carry-trade loses steam.

Compounding this financial uncertainty, geopolitical tensions, especially between the US and China, are reshaping the global economic structure. With both superpowers jostling for supremacy in advanced technology, the resulting decoupling is likely to reverberate across global supply chains.

India, meanwhile, stands resilient, with an enviable growth forecast of 7% by 2025. However, overregulation, limited banking reforms, and high youth unemployment risk stalling progress. The country’s centralised governance structure further hampers local development, leaving state and municipal authorities financially paralysed, unable to initiate necessary infrastructure investments.

As this unpredictable landscape unfolds, investment strategies must pivot towards caution. Bonds and commodities—especially metals and gold—present safer options amid impending market corrections, while equities in technology sectors may experience heightened volatility given the geopolitical risks. For investors and policymakers alike, a careful recalibration of risk and opportunity is essential in navigating a year of electoral and economic complexities.

This analysis, presented by IMA India Chairman and Editorial Director Adit Jain, formed part of IMA India’s Annual CFO Strategy Roundtable, Day 3, where CFOs gathered to examine the interplay of global economic forces and their implications for business and investment strategy.