The economics of war, (and its aftermath)

Between the end of World War II in May 1945 and Russia’s attack on Ukraine in February 2022, Europe has enjoyed an exceptionally long period of peace on its soil: 77 years. 

Old lessons for a new world

Over the last decade, zero interest rates in Europe did not hold back growth in private households’ financial assets, particularly in Germany (+5.2%). However, the growth drivers were quite different between countries: Whereas German households relied on fresh savings (mainly out of earned income), most other countries benefited from value gains (i.e. the rising prices of securities).

House of cards? Perspectives on European housing

Tightening financing conditions, slowing growth and soaring inflation are putting pressure on the European housing market. Swiftly rising mortgage rates have dramatically reduced home affordability at a time when home prices have already reached unsustainable levels in many European countries. 

ESG – from confusion to action

ESG is the trend in investing as an ever-increasing portion of portfolios from individual savers to large institutions is directed towards sustainable strategies. It is poised to become the key market driver over the next few years, with ESG assets set to grow by almost +13% p.a. until 2026, reaching USD34trn, compared to total market growth of only +4.3%.

Europe: How big will the interest rate shock be in 2023?

Against the background of rising interest rates and a worsening economic outlook, still favorable credit dynamics in the Eurozone are unlikely to last for much longer. After a year of stabilizing lending standards, banks have become significantly more risk averse.

Black Friday for consumers, bleak Friday for retailers?

US discretionary retail sales (durable goods, apparel, entertainment and leisure goods) peaked in Q3 2022, mostly driven by prices. In the same period, retailers had an estimated USD54bn in additional inventories vs 2021.

Financial globalization: moving towards a polarized system?

The Covid-19 crisis and, more recently, the war in Ukraine have led to some re-thinking of financial globalization. In particular, large emerging countries are showing growing discontent against the Western USD-centered framework. 

Africa’s journey to net zero: USD7trn just for energy

The green energy transition is a once-in-a-lifetime opportunity for African development, a chance to reduce poverty and lift growth potential. To reap this opportunity, there are three levers to pull: strengthening political stability and the rule of law, reducing project risks by adopting blended finance, and formulating clear green-energy strategies backed by economy-wide transition plans with sector-specific pathways. This paper aims at the last point, providing guidance for governments and investors alike.

Fixed income is back

In 2022, the record bear run across asset classes has eliminated any diversification benefits, leaving investors with no place to hide. Realized and expected monetary policy moves drove most of fixed income and equity performance.