Barclays Research released the 67th edition of the Equity Gilt Study (EGS), a flagship annual publication. Combining market-leading macro analysis with a multi-asset dataset spanning over 100 years, this year’s report takes stock of the effects of Russia’s war with Ukraine.
How does the European policy affect global dynamics?
Barclays’ Research analysts survey the future of the European monetary union, arguing that Europe often moves towards further integration during crises, and the recent past is no exception. The pandemic and the war in Ukraine have forced member states toward more political co-operation. This includes a common diplomacy, defense policy, and a energy policy.
US Dollar remains strong
Barclays Research argues that fears about the US dollar losing reserve currency status are greatly overstated. With the EMU still not fully integrated fiscally and politically and with the Chinese RMB only partially convertible, there are no good substitutes for the US dollar.
Instead, large exporters might try to reduce their United States current account surpluses by focusing more on regional trading blocs, in an attempt to diversify their foreign reserves.
Supply chain troubles causing institutional restructure
Barclays’ analysts note that the war is leading gov’ts and corporations to re-examine the resilience of their supply chains and other economic linkages. That could lead to at least a partial reversal of the multi-decade trend of globalization. Analysts see evidence of reshoring of critical processes and infrastructure, and of multinational firms hiring closer to home.
Finally, Barclays’ analysts consider the implications for the macroeconomic environment, which, over the past three decades, has benefited from a period of “Great Moderation”, characterized by a relatively stable backdrop of growth, inflation, and monetary policy. We think this may be changing, with significant implications for macroeconomic stability.
What were the executive’s thoughts on the study?
Commenting on the study, Ajay Rajadhyaksha, Global Chairman of Research at Barclays said, “In this year’s Equity Gilt Study, Barclays’ analysts explore how the war in Ukraine, coming on the heels of the pandemic, will likely permanently re-shape the macro landscape.”
“The Equity Gilt Study provides an indispensable tool to understand the themes and trends affecting global economies and markets for years to come,” Rajadhyaksha concluded.