At GIC Insights 2024, a distinguished group of economic and investment experts explored the market implications of geopolitical shifts, the US economic outlook, opportunities in AI and the energy transition, culture as an economic driver, and the evolving role of multilateral institutions. Held on 13 November 2024 in New York, speakers on the panel included:

• Kevin Warsh, Shepard Family Distinguished Visiting Fellow in Economics, Hoover Institution, Stanford University | Former Member of the Board of Governors, Federal Reserve
• Ken Griffin, Founder, CEO and Co-Chief Investment Officer, Citadel
• Jeffrey Jaensubhakij, Group Chief Investment Officer, GIC
• Gita Gopinath, First Deputy Managing Director, International Monetary Fund

This article presents the key takeaways from the discussion, which I had the privilege to moderate.

Note: In accordance with the Chatham House Rule, none of the insights reflect the views of or should be attributed to any single organisation or individual. Views expressed in this article may not be shared by all panellists.

Geopolitical tensions and trade fragmentation emerged as dominant themes influencing the global investment landscape on the panel. Traditional metrics of global trade, such as trade-to-GDP ratios, might suggest stability, yet deeper analysis reveals larger shifts. The globalisation of the past decades, driven by efficiency and cost minimisation, is now giving way to regionalisation and geopolitical realignment. Countries are increasingly trading and investing within their respective geopolitical spheres, such as US- and China-led blocs, rather than between them.

The impact on capital flows and currency dynamics is significant. The US dollar remains dominant as a reserve currency, but its share has gradually declined from more than 70% of global foreign currency reserves in 2000, to less than 60% in 2024. 1 Instead, countries are diversifying into non-traditional reserve currencies like the Australian and Canadian dollar, in addition to more common alternative reserve currencies like the Chinese renminbi. Gold is also increasingly sought after for its political neutrality.

However, the panelists emphasised that despite increasing fragmentation, global trade has held up due to “connector countries” like Vietnam and Mexico. These middle powers leverage their geopolitical neutrality and economic potential to emerge as key intermediaries, redirecting trade flows and benefitting from foreign direct investments from major economies.

The conversation then turned to the US economic outlook. The panelists attributed the optimistic market reactions to the 2024 US presidential election results to confidence that the new administration would streamline regulations and foster a “back-to-business” attitude, thereby strengthening US competitiveness.

In an audience poll on key issues to watch after the elections, tariffs topped the list, followed closely by inflation and conflict with China.

Echoing these sentiments, the panelists discussed the critical need to identify companies resilient to tariff-induced cost pressures and to monitor trade flows more closely, particularly for firms that come from trading blocs more susceptible to tariffs. Concerns were raised about the potential negative effect of tariffs on the competitiveness of local businesses. If tariffs were introduced to protect less competitive local businesses, they could in fact harm US businesses over the long term, by artificially insulating them from foreign competition and leading to a loss of competitive edge globally.

Rising debt and fiscal deficits were highlighted as structural issues that demand urgent attention. The US has been running deficits as if budget constraints do not exist, said one panelist.

The panelists underscored the importance of fiscal discipline in rebuilding confidence in US Treasuries, especially as traditional buyers like central banks and foreign governments reduce their participation. They explained that while new buyers would emerge, they are likely to be more price-sensitive. The long-term implications of these dynamics highlight the need for proactive measures to reassure markets and sustain economic growth.

The panel then examined the drivers and potential impact of inflation, with trade barriers, labour market tightness, and fiscal expansion identified as contributory factors to inflationary pressures. They noted that while the Federal Reserve has managed to prevent runaway inflation thus far, sustained price increases loom, particularly if policy decisions exacerbate supply chain disruptions or constrain labour availability.

The discussion emphasised the need for investors to prepare for multiple inflationary scenarios. Investing in inflation-protected assets, such as infrastructure with built-in inflation riders, offers a hedge against price volatility. At the same time, the panelists cautioned against overreacting to short-term market signals, advocating for a long-term perspective aligned with structural economic trends.

Despite its numerous challenges, today’s economic climate also presents significant opportunities. The panelists identified two primary areas of transformative potential: artificial intelligence (AI) and the energy transition, echoing the sentiments of the second audience poll.

The panel emphasised that AI is already reshaping industries, not through headline-grabbing generative applications, but through optimisation technologies that enhance efficiency and productivity. From reducing freight costs to improving supply chain logistics, AI is becoming an indispensable tool for business leaders worldwide. Its broader adoption and integration into everyday operations signal a cultural shift in how companies view technology as a strategic enabler.

Turning to the energy sector, the panelists highlighted the practical limitations of current renewable technologies, such as their intermittent nature and storage challenges. Nuclear energy, including promising advancements in fusion technology, was heralded as a potential cornerstone of future energy strategies. The growing interest in nuclear investments by major tech firms – like Amazon’s recent investment in small modular reactors2 or Microsoft’s relaunch of Three Mile Island 3 – underscores its potential to provide clean, reliable, and cost-effective energy.

Decarbonisation efforts were also analysed in the context of regulatory and market-driven dynamics. While policy uncertainty remains a challenge, the urgent need to address climate change suggests that investments in low-carbon technologies and infrastructure will yield substantial returns over time. The key, panelists argued, is to stay ahead of the curve, identifying cost-efficient and scalable solutions that align with evolving regulations and market demands.

Underlying these discussions was a broader theme of cultural resilience and innovation. Despite economic headwinds, the panelists agreed that the US remains a hub of entrepreneurial energy and technological progress. The enduring appeal of the American ethos—a willingness to take risks, innovate, and persevere—was credited as a key driver of its economic dynamism. This, combined with the influx of global talent, positions the US to capitalise on emerging opportunities, particularly in fields like AI and advanced manufacturing.

However, this optimism was tempered by concerns over policy. Panelists stressed the importance of fostering a stable and predictable environment for businesses and investors. Multilateral cooperation, clear rules of engagement, consistent immigration policies, and thoughtful governance were identified as essential ingredients for sustaining innovation and growth.

Finally, the discussion turned to the evolving role of multilateral institutions—like the International Monetary Fund (IMF)—in a fragmented world. As geopolitical tensions rise, the IMF’s ability to mediate and stabilise global financial systems is increasingly vital. The IMF’s value proposition lies in its ability to convene diverse stakeholders and promote collective solutions, especially in supporting developing nations by addressing sovereign debt crises as a lender of last resort, or through capacity-building.

However, such institutions face challenges in maintaining their relevance and representativeness. Ensuring all member nations feel adequately represented will be critical to their long-term efficacy. As global dynamics shift, these organisations must adapt to address emerging issues such as climate finance, digital currencies, and supply chain resilience, reaffirming their role as pillars of global economic stability.

While geopolitical fragmentation, inflation, and fiscal uncertainty weigh heavily, opportunities exist for those willing to embrace change and think strategically. The path forward requires a blend of resilience, adaptability, and long-term vision. Ultimately, the panel underscored the importance of staying invested—not just financially but intellectually and strategically—in a world as unpredictable as it is full of potential.