One of the largest fund managers admits the damage of capitalism to health, education or climate change

The Swiss Pictet, one of the largest investment fund managers in the world, recognizes, in its perspectives for the next decade, the damage of capitalism in health, education and its impact on the acceleration of climate change or greater inequality .

There is no 'Great resignation', but low wages and lack of training: Spain seeks to fill 109,000 vacant positions

Know more

Pictet published this Tuesday the tenth edition of "Horizon", a 10-year global forecast report, in which, among other trends, he predicts the return of "big government", as he calls it. That is to say, from a decade of greater public intervention in the economy, favored by “the successive crises”.

More state intervention after the pandemic

"The pandemic has forced governments to intervene, restricting economic and social freedoms in the interest of public health," explained Christophe Donay, director of asset allocation and macro research at Pictet WM, who warned that "The likelihood that governments will continue to intervene is one of the main factors we consider in long-term forecasts."

“The capitalist economic system has generated negative externalities: climate changeobstacles to first-class health care, declining efficiency of public education systems and inequalities in the distribution of income and wealth”, emphasizes the report of the investment fund manager based in Geneva.

For these reasons, he projects "the return of big government." And, as he adds, “the need for the ecological transition and the geopolitical confrontation also favor state intervention”.

Julien Holtz, emerging markets economist at Pictet WM, stressed in the same presentation that this return of “big government” could be “somewhat related to populism”, that “debt increases and regulation and reduces expectations of profitability [financiera] and long-term growth.

Pictet addresses other major issues for the coming years. On the one hand, a great wave of innovation. "The technological revolution has reached maturity and a new wave of innovation may be a couple of years away," he reflects.

Higher structural inflation

On the other hand, a period of “investments to deal with climate change”, which “should boost long-term growth”. Lastly, he observes “higher structural inflation”.

"After four decades of constantly declining inflation, the acceleration in prices that began in mid-2020 due to temporary supply and demand imbalances hides a structural dynamic," details the investment fund manager.

Nadia Gharbi, economist for Europe at Pictet WM, commented —also at the presentation of the report— that, indeed, “there are cyclical factors that favor higher inflation, including the normalization of services after the pandemic, the increase in the costs of energy and raw materials and excess demand with government support”.

"Besides, the ukrainian war it has an inflationary effect, especially in Europe. In the short term it generates uncertainty and in the long term it can affect economic growth, with greater spending on defense and energy, at the level of countries and the European Union, in its attempt to be energy independent, which can translate into greater public debt” , concludes the Pictet report.

Source link