In the last three decades, global GDP growth had been in the range of 2-4% every year with some exceptions. This growth came with the most widespread contribution since post World War II, this was thanks to no major global conflict or a geopolitical divide.
Within this period few specific countries grew much higher such as China which grew close to an average of 8% or more thanks to most countries making it into a global manufacturing hub. India grew within a range of 5-8%, this was led by major reforms in 1991 and a major shift in domestic consumption patterns.
As of today, the world has gone through various changes in the past three years that have put this trend relevant only to history books. The main reason for this has been the conflict that continues in a major continent that has the risk of escalation and a geopolitical divide that might be highest since World War II.
Due to these changes, the focus of every major nation is to bring back manufacturing home, especially products that are necessary for the future such as semiconductors. For this purpose, countries are announcing subsidies that in total surpass not only local records but global as well. Whether it is the US inflation act or India’s product-linked incentive.
This has led corporates to reconfigure their decades-old strategy. For example, TSMC's largest semiconductor manufacturer that never left its home country Taiwan is not setting up manufacturing in various countries. Even such changes have impacted Apple remained mostly depending on China to shift product based to different countries such as India for iPhones and Vietnam for iPads.
How will all of this pan out? It is something that all investors are trying to figure out. But one this for sure the next two or three decades of global growth will certainly be more region-dependent than country-specific. And this is why the Regional Bloc's political and investment strategy will be important.
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