This article adapts remarks delivered by GIC CEO Lim Chow Kiat at GIC Insights LIVE 2020, a virtual convening of thought leaders around the world to discuss the future of sustainability, healthcare and technology. GIC Insights is our annual flagship event that gathers a select group of prominent business leaders to deliberate over long-term issues pertinent to the international business and investment community.
With all the big changes going on in the world, we need to re-imagine the future. We need to do so by identifying the key forces at work, deduce their implications and formulate our plans.
Last year, I highlighted three of those forces: rising inequality, disappearing interest rates and technology disruption. They are still very much in play. This year, let me add three more to that list.
First – large policy interventions
With the COVID-19 emergency, policymakers have doubled down on government interventions. These actions are necessary to avert an immediate economic collapse. They have boosted financial markets, benefitting all investors.
But they are not by themselves a long-term solution. Most emergency spending and lending have gone towards relieving short-term pressures. They are a liquidity bridge. Solvency remains an issue.
The resulting low interest rates, debt piles and heavy financial market reliance on policy support could lead to large distortions of economic decisions, macro instability and market fragility.
We expect the economic environment to be volatile and challenging, but for long-term investors like GIC, we are prepared for new risks and hopeful of new investment opportunities, and welcome new collaboration opportunities.
Second – great dispersion of outcomes
There are a great many divisive trends at work, in economics, politics, technology and geopolitics, which are likely to be with us for many years. This will require us to adapt and adjust to the resulting wide dispersion of outcomes, by: