New cold wars according to Ludovic Subran


Monday 16 October at the Métropole Monte-Carlo, Chief Economist Ludovic Subran at Alliance was invited by Monaco Economic Board to give his analysis of the global macroeconomic situation. It was an instructive overview in the light of unprecedented situations created by crises that have rocked the world.

In front of 100+ Monegasque decision-makers, Ludovic Subran began with a brief overview of a global situation affected by a range of tensions and crises, the consequences of which are already having an impact. “I view these last three years as a radical paradigm shift”. Upheavals have led to an economic war “that’s to say rationing and restraint, the reallocation of capital to the war effort, for example to control energy prices, and finally debt monetization” (financing by creating new money).

In addition to “hot” wars (Ukraine but also the Covid crisis, classified depending on responses by various States) “cold” wars are emerging or being confirmed such as the Sino-American rivalry, but also climate change and ageing populations (dependent on States responses to them). “The tools implemented by governments to deal with these situations are interventionism, protectionism and legalism”. The consequences? “Less growth for sure, persistent inflation and for companies an obligation to ramp up vigilance to limit risk, particularly in their supply chains and financing”.

To further complicate the situation, 2024 looks set to be a long one for forecasters given the high number of crucial elections which will weigh down the global economy, starting with those in the USA in November which will foster a wait-and-see attitude by businesses.

The economist believes it is very possible that Donald Trump will be returned which would result in growing global instability: overheating of the American economy, intensification of the trade war with China and states that have some form of allegiance with the Middle Kingdom, probable disengagement from Ukraine and lastly widening differences with Europe concerning ESG (Environment, Social, Governance) standards of which he is very critical. “In other words, an election far from being insignificant” concludes Ludovic Subran.

On climate change, a “very tough economic subject (...) we know that each State must invest three points of GDP a year to reach the Paris agreement objectives” and even if they are achieved, extreme events are inevitable and the consequences for business significant. In Spain for example the heatwaves would have cost the country one GDP point in 2023 and prospects for the demographic giant, India, are undermined by its climatic vulnerability.

As for inflation, it is dropping but more slowly than expected and without falling to below 2% due to the slowdown in the global economy and action by central banks which should start lowering interest rates to the end of 2024. States will have to tighten their belts to avoid being strangled by debt.

Finally, impossible not to mention artificial intelligence. Global inequalities are unlikely to end any time soon. Entire trade sectors and even countries could suffer the brunt of their lack of preparation for this revolution.

Without a doubt, Ludovic Subran delivered another fascinating talk, organised in partnership with Monaco Asset Management and the Monaco Junior Chamber of Commerce, enlightening MEB members on a range of topics by combining global analyses and tangible examples with his wit and wisdom. As always, the cocktail that followed was an excellent opportunity to chat with the economist who is always delighted to meet Monegasque entrepreneurs.

l-r Gian Luca Braggiotti, Chairman of the Board, Monaco Asset Management; Marie-Gisèle Fringant, President JCE Monaco; Ludovic Subran, Chief Economist Allianz; Michel Dotta, Chairman MEB; Anthony Stent-Torriani, Founder & CEO Monaco Asset Management; Guillaume Rose CEO MEB. (Photos credits: MEB/Landry Basile).