Economic Growth Metrics

Capital on the Move: From London to Southern Europe We’re witnessing one of the most important capital shifts in recent memory: money is moving out of the U.K. property market and flowing into Spain, Portugal, Dubai, and Cyprus. Why? In Prime Central London, prices are not just soft—they’re down as much as 40% if you hit the bid. Liquidity has vanished. Mortgages are resetting higher, owners face a liquidity crisis, and foreclosure pipelines are quietly building. The market feels stuck: sellers anchored to yesterday’s valuations, buyers demanding deep discounts, and the debt layer tightening with every passing quarter. Meanwhile, international capital is hunting for yield, lifestyle, and resilience. Across southern Europe and the Gulf, assets are cheaper, financing often more flexible, and the long-term structural demand story is intact—especially when compared to a U.K. market frozen by tax policy, political risk, and affordability collapse. But not every sector is worth chasing. The ultra-prime is overbought, the speculative holiday home markets over-supplied. The only part of the market that offers sensible, scalable opportunity is the squeezed middle: • People who don’t qualify for social housing, • Can’t afford prime or luxury, • Yet need good quality rental and ownership options. This middle segment is underbuilt in every market—from London to Lisbon to Limassol. It’s where demand is permanent, and where institutional capital can find sustainable strategies rather than speculative trades. Capital is flowing. The question is whether investors will chase the headlines—or build in the middle, where the long-term value truly lies. #CapitalFlows #RealEstateInvestment #UKProperty #SouthernEurope #SpainProperty #PortugalProperty #DubaiRealEstate #CyprusProperty #HousingCrisis #SqueezedMiddle #InstitutionalCapital #PropertyInvestment

Global investment rankings are often treated as a measure of economic success. They may be more useful as a forecast. Capital does not simply flow toward current performance. It flows toward expectations of future capability. Infrastructure, talent availability, market access, regulatory predictability, and the ability to scale all influence where investors choose to commit for the long term.     Investment is often discussed as a reflection of present opportunity. It is also a signal of where future capacity, competitiveness, and economic influence are expected to emerge. When capital commits at scale, it does more than fund growth. It expands infrastructure, deepens industrial ecosystems, attracts talent, and reinforces the conditions that support future investment. Over time, these effects compound.     For leadership teams, understanding investment trends is about more than identifying where money is moving. It is about understanding where confidence is accumulating and what that may signal about future operating environments. Capital ultimately follows conviction. Where it concentrates offers a glimpse into where investors believe future capability, competitiveness, and growth are most likely to emerge. 

Where is money flowing in India? Is the trend about to reverse? 2025 has been a reality check for investors. After blockbuster returns in previous years, equity mutual funds have delivered just 4–6% average returns in the last 12 months; several categories even posted negative 1-year rolling returns for the first time since 2018. Small-cap and mid-cap schemes, once the hot favourites, have seen a sharp drop in inflows. What’s happening behind the numbers? 1. Caution is back: Equity fund inflows dipped 9% in September alone, and investor appetite for lump-sum bets is down. 2. Institutions rotate and diversify: While retail investors are pausing, institutions (MFs, FIIs, FPIs) have shifted assets into debt, gold, and new NFOs. Foreign investors pulled out ~$17B from India this year. 3. Sector rotation in play: Banking, auto, and silver ETFs outperformed equities, and new flows are concentrated in niche sector/thematic products, crowding risk is rising, with 25% of all inflows in just six stocks. Are we about to see a reversal? a. Mean reversion likely: Analysts expect large-cap earnings recovery and moderation in valuations could set up a better 2026, with 5–10% upgrades to FY27 earnings estimates. b. Selective alpha: With markets rangebound, stock-picking and sector allocation matter more than ever. Only 35% of stocks are above their peak 2024 levels; being selective will drive results. c. Broader asset flow: Gold, silver, and some debt funds have outpaced equity. Passive funds (ETF index, sectoral) continue to gain traction, but broad participation remains subdued. After a flat year for equities, flows into risk assets are slowing and reallocating; caution, discipline, and selectivity are trending. What’s your view? Are you sticking with equities or diversifying for 2026?

📊 The US economy continues to expand — but the foundations of that growth are shifting. 📉 Real GDP growth slowed sharply to 0.7% (annualized) in Q4, bringing full-year 2025 growth to 2.1% despite an extraordinary combination of supply shocks: trade policy upheaval, rapid AI adoption, and a historic collapse in immigration. Much of the late-year slowdown reflected the longest government shutdown in US history, but private demand also softened modestly. 🛍️ Consumers are still spending, but they are becoming far more selective. Spending rose 0.4% m/m in January, yet real consumption increased just 0.1%, with households rotating away from tariff-impacted and higher-priced goods. Outlays are increasingly concentrated in “must-do” services such as housing, utilities, healthcare and insurance, while discretionary categories like travel, restaurants and leisure are seemingly losing momentum. 💰 The income foundation supporting consumption is fragile. Real #consumer spending is growing 2.4% y/y, but real disposable income is expanding at a slower 1.8% pace. This gap suggests resilience in consumption is increasingly sustained through tighter budgeting and spending selectivity rather than stronger income growth. ⚙️ Meanwhile, #productivity — not hiring — is driving the expansion. The economy added only 116,000 jobs in 2025, yet output continued to expand as firms focused on efficiency in a high-cost, high-interest-rate environment. Productivity has grown at a 2.2% annualized pace since 2019, supported by operational discipline and increasingly by #AI investment. 📈 Inflation pressures also remain stubborn. Core PCE #inflation accelerated to 3.1% y/y in January, and short-term momentum suggests underlying price pressures were already firm before the recent energy shock tied to the #MiddleEast conflict. ⚠️ Looking ahead, the US economy faces a new set of crosscurrents. Higher energy prices, tighter financial conditions and elevated geopolitical uncertainty are likely to push inflation temporarily higher this spring while weighing on growth. The expansion is continuing — but it is becoming more uneven, more selective and more sensitive to supply shocks. We have revised our #GDP growth forecast to 2.0% in 2026. EY-Parthenon EY Lydia Boussour

Why Alternatives, and Why Now? Markets shift, cycles turn, and investors ask the same question: How will alternatives hold up when the tide changes? We’ve run the numbers, mapped out the scenarios, and here’s the takeaway: Alternatives remain relevant across bull, bear, and base cases—but how you allocate matters. 🔴 Bear Case: Market Disruption Recession, geopolitical risk, and tighter liquidity? Equity markets struggle, defaults rise, and risk tolerance fades. • Private Equity: Distressed buyouts gain traction as secondary markets pick up bargains. • Macro Hedge Funds: A bright spot—volatility creates opportunities in FX and rates. • Private Credit: Defaults climb, but high-quality credit holds steady. • Infrastructure: Defensive assets like utilities and essential services remain resilient. ⚪ Base Case: Stabilization & Modest Growth Rates stabilize, inflation stays in check, and markets tread water. • Private Equity: Mid-market buyouts and secondaries thrive, while defensive sectors like healthcare attract capital. • Macro Hedge Funds: Systematic strategies benefit from macro trends. • Private Credit: Direct lending remains a steady performer. • Infrastructure: ESG and sustainability-linked projects attract capital. 🔵 Bull Case: Accelerated Growth Global expansion, rate cuts, and rising optimism fuel risk-taking. • Private Equity: Tech, AI, and healthcare see surging valuations. • Macro Hedge Funds: Trend-following strategies ride the market wave. • Private Credit: Yield-seeking investors move into structured financing. • Infrastructure: Capital floods into renewable energy and transport projects. My Take? The case for alternatives isn’t binary—it’s about resilience, flexibility, and knowing where to lean in. When equity beta wobbles, alternatives offer a playbook for every market regime. As Howard Marks put it: “You can’t predict. You can prepare.” Are you positioned for what’s next? #Investing #Alternatives #Markets #PrivateEquity #MacroHedgeFunds #PrivateCredit #Infrastructure

𝐌𝐨𝐧𝐞𝐲 𝐢𝐬 𝐜𝐡𝐚𝐧𝐠𝐢𝐧𝐠 𝐢𝐭𝐬 𝐚𝐝𝐝𝐫𝐞𝐬𝐬. Not where it invests- where it lives. Over the past year, 𝐃𝐮𝐛𝐚𝐢 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐂𝐞𝐧𝐭𝐫𝐞 reported nearly  𝟒𝟎% 𝐠𝐫𝐨𝐰𝐭𝐡 𝐢𝐧 𝐧𝐞𝐰 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐫𝐞𝐠𝐢𝐬𝐭𝐫𝐚𝐭𝐢𝐨𝐧𝐬, crossing 𝟓,𝟓𝟎𝟎+ 𝐚𝐜𝐭𝐢𝐯𝐞 𝐟𝐢𝐫𝐦𝐬, including hedge funds, PE players, and family offices. This isn’t incremental inflow. It’s relocation. For decades, capital stayed anchored in 𝐍𝐞𝐰 𝐘𝐨𝐫𝐤, 𝐋𝐨𝐧𝐝𝐨𝐧, 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠. It travelled globally, but its base didn’t change. Today, that anchor is shifting. 𝐓𝐡𝐞 𝐔𝐀𝐄 is not just attracting capital - it is attracting 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐨𝐫𝐬. That distinction is structural. Because when the decision-makers move, capital follows by default. And the drivers are clear: –Zero/low tax environments –Faster regulatory approvals (often weeks, not months) –Strategic access across 𝟑 𝐜𝐨𝐧𝐭𝐢𝐧𝐞𝐧𝐭𝐬 𝐟𝐫𝐨𝐦 𝐚 𝐬𝐢𝐧𝐠𝐥𝐞 𝐛𝐚𝐬𝐞 But the deeper shift is this: Where capital sits now determines how it moves later. In a fragmented global environment - tightening regulations in the West, uncertainty in Asia - capital is optimising for flexibility, neutrality, and speed. That’s jurisdiction arbitrage at scale. And it changes how investors and founders should think about positioning: –Capital is no longer just something you raise - it’s something you locate –Geography isn’t fading in importance - it’s becoming a competitive edge –Access to capital is shifting toward access to 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐞𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦𝐬 Which makes this less about markets- and more about control. Because the advantage today is not just deploying capital well - it’s being close to where capital decisions are made. So the real question is: Are you building where opportunity exists… or where capital is choosing to base itself? #UAE #GlobalCapital #PrivateMarkets #CapitalAllocation #Geopolitics #InvestorStrategy

Investors have learned to fear a cooling labor market but it might be time to retire that habit. The latest data suggest slower hiring is undermining neither growth nor profits. Rather, the numbers reflect an economy generating more output with fewer workers — a productivity-driven expansion that is unusual by historical standards but nonetheless bullish for asset prices. Through 2025, the labor market faltered and aggregate hours worked flattened. Typically, that combination would foreshadow a slowing economy, as many on Wall Street predicted repeatedly last year. Yet this time real GDP continued to accelerate, clocking in at 4.3% in the third quarter. Productivity, meanwhile, surged at a nearly 5% annualized rate. This presents a particularly juicy set up for corporate America: • Unit labor costs are falling • Inflation pressure is softening • Profit margins are expanding In other words, companies can grow earnings without relying on aggressive hiring or price increases. Full analysis in Opening Bell Daily! 👇

Stunning figure from a new paper by Jonathan Berk and Jules van Binsbergen showing that, while government debt-to-GDP ratios are on a clear upward trend and reaching historically high levels (top figure), other plausible indicators of government indebtedness paint a very different picture (bottom figure): 🔹interest expense-to-GDP ratio (orange) 🔹debt-to-equity ratio (blue) Data are from 19 large countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, France, Germany, Greece, Italy, Japan, Mexico, Netherlands, Russia, Spain, Sweden, United Kingdom, and the United States. Read the full paper here: Jonathan B. Berk and Jules H. van Binsbergen (2026), Why Care About Debt-to-GDP?, National Bureau of Economic Research Working Paper No. 34629: https://lnkd.in/euM5Xjca This is the Abstract: "We construct an international panel data set comprising three distinct yet plausible measures of government indebtedness: the debt-to-GDP, the interest-to-GDP, and the debt-to-equity ratios. Our analysis reveals that these measures yield differing conclusions about recent trends in government indebtedness. While the debt-to-GDP ratio has reached historically high levels, the other two indicators show either no clear trend or a declining pattern over recent decades. We argue for the development of stronger theoretical foundations for the measures employed in the literature, suggesting that, without such grounding, assertions about debt (un)sustainability may be premature."

Japan 🇯🇵 likes a rising market. And it has real fiscal reasons to sustain one. Investors often point to Japan’s gross public debt-to-GDP ratio (>230%) as evidence of structural fragility. That framing is increasingly outdated. A more useful lens is Japan’s net consolidated public balance sheet. And specifically what Shinzo Abe’s policy architecture created over the last decade: A de facto leveraged sovereign wealth fund. This is what happened: ▶️ The Bank of Japan accumulated domestic equities at scale ▶️ The Government Pension Investment Fund doubled its equity allocation target to 50% ▶️ The state effectively borrowed at near-zero short-duration funding costs and allocated capital into long-duration risk assets In other words: Japan used its exceptionally cheap sovereign funding base to run a national-scale carry trade. And it worked. According to new research highlighted by Hanno Lustig and co-authors, this strategy generated annual excess returns of ~4.6% above funding costs from 2013–2023, equivalent to roughly 6% of GDP per year. ➡️So despite Japan’s continued primary deficits, net public liabilities fell dramatically: from 117% of GDP in 2012 to ~65% in 2025.⬅️ ❗️That is a remarkable fiscal repair story hiding behind an alarming gross debt statistic. The important takeaway for equity investors: Japan is now highly incentivised to sustain domestic equity market strength. Because the public sector now holds domestic equities worth ~41% of GDP. That means higher equity valuations directly strengthen the sovereign balance sheet. This helps explain why Tokyo’s push for corporate governance reform are everything but cosmetic. They are effectively fiscal policy transmitted through corporate governance. Japan these days is managing one of the world’s largest leveraged national investment portfolios. Which creates powerful structural alignment behind continued equity market reform and performance. As an investor with a major allocation to the Japanese equity market, I found this is a highly relevant story worth paying attention to. Based on a research note from Verdad Advisers (Dan Rasmussen) (+++Opinions are my own. Not investment advice. Do your own research.+++) 👋 Follow for calm thinking in noisy markets, and Friday Funnies when we’ve earned them. Calm is a strategy.

Here's our quick thoughts on the consensus-defying growth numbers release a few moments ago: This was the first full month of data since developments in the Middle East, and the figures defied consensus. The UK economy extended its growth streak, expanding by around 0.3% month on month. More encouragingly, growth was once again broader-based than we have seen for much of the past few years. So what explains the resilience? The UK economy appears to have picked up speed in the first two months of the year following the Autumn Budget, and some of that momentum carried into March. Today’s data suggests that earlier momentum still had some distance to run. That is notable given the fog of uncertainty around the duration and severity of developments in the Middle East. When visibility is limited, behaviour tends to vary: some firms stockpile, some consumers continue to spend as normal, and others become more cautious. Today’s data indicates the first two groups outweighed the third. Looking ahead, survey evidence suggests caution may build from here. The key question is whether March marks a continuation of durable momentum, or whether uncertainty begins to weigh more heavily on sentiment, spending and investment decisions in the months ahead. The latter seems more likely. #UKEconomy #GDP #EconomicGrowth #Macroeconomics #EconomicOutlook #BusinessConfidence #Geopolitics #ConsumerSpending PwC UK