MARKETS & INVESTING
The 3D reset : the world ’ s disruptive return to the old normal
‘ The 3D Reset ’ refers to the three ‘ Ds ’ of decarbonisation , demographics and deglobalisation .
W e believe these ongoing trends have had and will continue to have massive long-term implications for the global economy . Taken together , the three Ds are reshaping the investment landscape . Understanding the three Ds – how they affect the global economy , what that means for market volatility and how active investors should be allocating their assets – might be the key to deciphering what comes next and where the opportunities are .
What are the three ‘ Ds ’?
1 . Deglobalisation
The COVID-19 pandemic and increasing geopolitical tensions have heralded a new era where greater supply chain resilience and security is a priority . These winds have and may continue to encourage greater nearshoring of key sectors , such as manufacturing , which in turn could have implications across a wide range of sectors and asset classes .
Key takeaways
• Exposed global supply chains : The existing globalised model of extended supply chains is increasingly being questioned . Multinational firms are considering onshoring , nearshoring and / or friendshoring production , driven by concerns around supply chain resilience and reliability . Security of supply becomes increasingly important .
• Long-term inflationary pressures : The pandemic further intensified the already strained relationship between the West and China . The Russia-Ukraine conflict exposed similar dependencies , particularly regarding energy and agriculture in Europe .
• A new world order is developing : Multinational firms are diversifying their production and relocating it nearer to home in a process known as reshoring . Economies that attract these manufacturing firms could boost their growth over time .
42 | the adviser