Trend 2: A global backlash to globalization
Even if a deregulatory agenda is pursued by Congress and the Trump administration, it might be tempered by the anti-globalist backlash gripping many major world economies – including the US, where President Trump’s “America First” rhetoric has tapped into this popular distrust of internationalist attitudes.
Nationalist, populist politics may limit cross-border activity. “Global headwinds will be more complicated than in the recent past,” says Nouriel Roubini, Professor of Economic and International Business at New York University Stern School of Business, in our report. Protectionist barriers could make it more difficult for leading PE firms to recruit internationally. This could be particularly damaging in an age where fresh, tech-savvy talent is more in-demand than ever before.
From its earliest days, PE has looked across borders for investment opportunities, and this isn’t likely to stop. “The Pritzker and Rockefeller families have been investing overseas since the 1970s. Many PE firms have been global for a long time,” commented Mel Klein, Founder of GKH Partners, in our report. This is a persistent trend – according to Kaye, half of Warburg Pincus’ investments are outside the US, and 40% are in Asia.
The attractiveness of overseas investment will only increase as more and more opportunities present themselves in fast-growth markets in China, Southeast Asia and Africa. And if the nationalist trends across the developed west continue to gain momentum, and subsequently result in declining growth, then developing economies may seem more attractive still.
“The increased nationalism we are seeing around the world is a continued threat to the global economy and its growth potential,” says Mark A. Weinberger, Global Chairman and CEO, EY. “Globalization is an opportunity, but it has to be managed with an eye towards inclusive growth. PE needs to be part of the solutions that address the downside and tensions globalization brings.”
What other headwinds are on the horizon? For more insights on how PE is addressing external market forces, read the full report or find further information here: