Will growth be hit by geo-political risk?

Markets are starting to question whether the prospect of robust - albeit unevenly distributed - growth will be disrupted by rising inflation and increasing geo-political risk.

Although we suspect not, widespread unrest in the Arab Middle East was not anticipated and, even where incumbent regimes manage to stay put, the young educated section of the population is unlikely to abandon demands for democratic change and fairer wealth distribution. Another unanticipated event was Japan’s earthquake which, although tragic, might bring higher GDP once reconstruction gets underway. Global economic growth is likely to remain above the long-term average in 2011 but momentum is slowing, most obviously in emerging markets and especially China, which is probably midway thro...