2023 Mid-year global policy outlook

Global Policy mid year outlook

A lot has happened in the first half of 2023. But not much has changed in the macro geopolitical front since January. The same issues remain prevalent – the Ukraine-Russia war, US-China tensions, and the post-COVID-19 supply chain realignment all continue.

Though there are signs that, despite the ups and downs in each situation, each has ‘matured’ in some way. Most in business and finance want things to either go back to the way things were, or rush to the other side. But these issues are likely to be with us for some time – part of our new normal. Each is influencing global inflation as central banks and policymakers scramble for solutions.

Europe & the UK

The European Central Bank and Bank of England are doing their part to battle inflation. Both are also cognizant of the vulnerabilities in their economies though. The EU and UK reached an agreement over Northern Ireland. While this could be a sign of more cooperation to come, it’s more likely a signal of some moderation in post-Brexit EU-UK tensions.

Elections are a certainty in both jurisdictions in 2024. In the UK, for both prime minister Rishi Sunak and leader of the opposition Keir Starmer, gaining political momentum in the next six months will be critical to their electoral chances next year.

In Europe, the European Parliament has traditionally been led by a centre-right and centre-left politically leaning coalition. But recent regional elections indicate that change may be in the air. When voters went to the polls in the likes of Italy, Finland and Germany, results suggested a political shift to the right, a trend which could be reflected in the composition of the next European Parliament.

US policy outlook

The Federal Reserve (Fed) has been hyper-focused on controlling inflation, but markets continue to be confused about when monetary policy tightening will end, and interest rate cuts begin. If inflation persists well above target and the economy remains resilient, rate cuts seem far off.

Meanwhile, the Biden administration continues to turn the “industrial policy” legislative successes of 2021 and 2022 into reality. This includes the bipartisan Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. This is hard work, and it remains to be seen whether they can deliver enough results for the American electorate to notice before the November 2024 elections.


China has declared COVID-19 over. Not only is the economy open for business, but the government is on a serious charm offensive to lure foreign company investment. This is in part to combat US efforts to limit its investment in critical areas and to get its allies to do the same. The US asserts that, like Europe, it is “de-risking,” not decoupling from China. But it still feels like decoupling when compared to the full economic embrace not so long ago.

Economic, diplomatic and unfortunately military US-China tensions will continue through way-too-close engagements in the air and in the sea. But in our discussions with both governments, it’s clear that both want to cooperate and collaborate where they can.

Any hostilities would not only be unfortunate for the parties involved but would clearly have an outsized impact on the world economy.

The rise of emerging markets

Last, like many of you, we’re looking closely at the “Global South” and the Middle East – emerging markets as a financial asset class. These countries are leveraging China’s rise as a real alternative to the US and its allies. Some have been aggressive, like Brazil, while others have been more subtle. Either way, this “competition” between China and the US for political influence and market share in these countries is going to be with us for some time to come.

Investment risks

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Important information

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