- While inflation will moderate, it is unlikely to stay at a lower level unless sticky supply-side constraints are resolved. We believe interest rates are unlikely to return to ultra-low levels. As a result, the cost of capital is likely to remain higher.
- Higher borrowing costs will have an impact on credit-led growth, and the cyclical boost to the global economy will suffer to some extent. However, select emerging economies in Latin America and Eastern Europe will likely pursue a favourable monetary policy to boost economic activity and asset valuations.
- We remain constructive over China’s medium- to long-term prospects as its economy transitions from a resource-driven and debt-based model to a higher value-added and sustainable growth model.