In the 2020s, everything is about multi-alignment and ongoing risk re-balancing.
After over 10 years of repeated crisis, all traditional economic powers including Switzerland, maintain a privileged position in the global economy and each of them faces new risks and uncertain challenges. A decade of stagnant growth, combined with low-interest rates proving privates, institutionals and corporates with low borrowing costs, has made the rise in social inequality and in social relationships undeniable.
Geopolitical tensions, the highest since post-World War order, and the pandemic, have also made it undeniable that globalization has come to a halt. The most recent wave of insolvencies amongst US small banks and of Credit Suisse evidences how structural flaws remain a key weakness in times of economic and of monetary policy turns. It proves orthodox competence in good financial planning, and best-in-class governance, evolved to be of the essence for shaping order and effectively serve sustainable and long-term objectives, purposes, values.
The unity and resilience of democratic structures supporting sovereignty, territorial integrity and civil values in the face of Ukraine invasion, as well as the strong migratory flows also from Turkey, demonstrate that the power of dualistic frameworks counterposing democracy versus autocracy, does not hold in today’s more complex, more connected world, where the pace of events is also subject to accelerations boosted by technology, interconnectedness, and not the least by social media.
Facing all of this, the key risks we see remain liquidity in investments, high leverage (or debt) in both private households, institutional and corporates, with concentrations in specific asset classes making portfolios more vulnerable and exposed. Cyber-security, deceptive AI-models, climate-related threats which correlate to unpredictable pandemic outbursts, social and geopolitical tensions stay high on global risk agendas.
Monitoring of liquidity and of concentrations, alongside prudent in-depth analysis for re-alignment, are key actions to both preserve capital and to de-risk, and at the same time to keep competitive, as volatility may still be interesting for trading while it makes investments more difficult. Alternatives, from traditional to commodities to new classes, continue to be subject to similar challenges and to a variety of re-balancing ahead, noting that both new technologies, which continue to be more profitable for insiders, and ESG investments, are undergoing major developments.
Insofar, Switzerland has managed to keep structural inflation contained and its growth pace on forecast with moderate yet positive growth, thus consolidating its position as long-term, solid pillar for civil, financial, innovative excellence and entrepreneurial values, albeit it still faces structural and geopolitical challenges ahead.
Multi-alignment amongst critical—and sometimes unpredictable—forces, is part of the risk study in the world’s next stage of globalization and the next phase to stay competitive.