While it may seem as though the global economy faces a difficult outlook, in reality there is a vast amount of opportunity on offer for long term investors.
Certainly, the US economy could endure a challenging period after the election of a new President and the potential for interest rate rises. Similarly, China’s transition towards a more consumer-focused economy is unlikely to be frictionless. And with Europe having an uncertain future, it may feel as though there is nothing but difficulties and risks ahead for investors.
However, the reality is that there has never been a better time to invest in the global economy. For starters, doing so today is easier than ever thanks to advances in technology and globalisation. For example, an investor on one side of the world can now invest in a company or industry on the other side of the world at the click of a button. The internet has made buying and selling shares easier and cheaper, with new apps and programmes to keep track of your investments being developed all the time.
Furthermore, the emerging world provides high growth opportunities. Wage levels across China, India and other emerging economies are set to soar over the medium term to create opportunities for consumer goods and financial services companies to build their customer bases. And with economies across the globe becoming increasingly open to lower tariffs when trading with each other, cross-border transactions are likely to increase over the long run. This should provide a positive catalyst on profitability for multinational businesses.
Even challenges faced by the global economy offer potential opportunities for investors. For example, the world’s population is forecast to rise by around a third between today and 2050. This will increase demand for resources such as food over the long run, which could provide a tailwind for investors who have exposure to resources sectors. Furthermore, education providers could receive a boost in demand for their services, while additional healthcare products and services are also likely to be required as the world’s population gradually rises.
Similarly, an ageing population across both the developed and developing world provides a growth opportunity. Certainly, it may put pressure on public healthcare, but it also opens up opportunities within the private healthcare space as well as in products and services which are aimed at improving the quality of life for older people.
As such, the opportunity for investors to capitalise on the progress made by the global economy has never been greater. Certainly, there are challenges ahead in the short run as political risks remains high. However, challenges such as population growth and an ageing population can provide opportunities, too. And with technological advancement making it easier and less costly than ever to invest in all four corners of the earth, there has never been a better time to be an investor.