Morgan Stanley
  • Wealth Management
  • July 1, 2024

Understanding the current geopolitical landscape

An expert panel came together to discuss the core dynamics at play within the current geopolitical landscape.

With fresh uncertainty surrounding Ukraine's conflict with Russia, lingering concerns about the US-China relationship and the upcoming US election, the spotlight is firmly on the geopolitical investment landscape shaping the global economy. To discuss these themes, Seth Carpenter, Managing Director and Global Head of Economics, Morgan Stanley was joined by Susan Chan, Senior Managing Director, Head of Asia Pacific, Blackrock and Libby Cantrill, Managing Director, Head of Public Policy, PIMCO. 

The current landscape

As geopolitics and national security are to a growing degree driving how goods flow and where big capital investments are made, it’s that much more crucial for investors to know how to filter the market noise and focus on what’s relevant.

In the US, the Federal Reserve has tried to map out interest rate cuts under the assumption that inflation will finally come under control. However, growth and the labor market have remained robust. 

The US and China relationship

With the US general election in November, increased political polarisation, geopolitical tensions and US fiscal and economic uncertainty are just a few factors that could shape the election and impact investors. 

As both Biden and Trump vie for a second White House term, Cantrill suggested that a more competitive relationship with China is likely to play out. In terms of tariffs, they are expected to rise regardless of a Biden or Trump win. 

Susan Chan stated that China is still the US’s largest trade partner, and the two economies will continue to depend on each other. While this may change in the future as they find a new norm, China remains aware that it needs the US as a trading partner. 


Immigration was also discussed as a topical thematic, with panellists agreeing this is relevant not only in the US, but increasingly globally. 

The US is founded on immigration, foreign-born workers are replacing those who are retiring in the coming years and the addition of workers and consumers will continue to fuel steady output growth. 

Cantrill estimated that in the US, immigration has added between 50 and 100 basis points to the GDP over the last year – so immigrants are very important from an economic perspective.

However, immigration has become a politically salient issue. Cantrill pointed to President Joe Biden’s signing of an executive action in June 2024, that will temporarily shut down asylum requests once the average number of daily encounters tops 2,500 between official ports of entry.

Immigration is also sure to remain a fraught topic on the US election trail, with debates swinging between the upside to economic growth from the influx of new participants in the economy and workers in the labour force, to burdens on local and federal infrastructure and resources.  

US deficit scenarios

Record levels of government spending in response to the COVID pandemic preceded the current inflationary environment in the US —but would increased spending, with an expansion of the deficit, have the same impact following the upcoming election?

Cantrill added that regardless of who wins the election, the biggest loser is likely to be the US deficit. For big ticket items such as Social Security and Medicare – the deficits will continue to be high.

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