Top money manager says the West’s economic war against Russia will cause governments and businesses to rethink overseas dependencies
Larry Fink (BlackRock CEO), whose company oversees about half of the US GDP’s investments, predicts that Russia’s invasion of Ukraine will lead to globalism unravelling as decision-makers consider their foreign vulnerabilities.
“The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades,”Fink made the statement in a Thursday letter to investors. “We had already seen connectivity between nations, companies and even people strained by two years of the pandemic. This has made many people feel disconnected and forced to look inward. I believe this has exacerbated the polarization and extremist behavior we are seeing across society today.”
The West responded to Ukraine’s crisis with an international response. “economic war”Fink pointed out that Moscow was targeted in unprecedented ways, such as preventing the Russian central banking from using its foreign currency reserves. Financial institutions, capital markets and other business have lifted sanctions on Russia, cutting off ties with their Russian counterparts.
“Russia’s aggression in Ukraine and its subsequent decoupling from the global economy is going to prompt companies and governments worldwide to re-evaluate their dependencies and re-analyze their manufacturing and assembly footprints – something that Covid had already spurred many to start doing,”Fink stated. He said that companies would move their operations more to home or neighboring countries, which will lead to increased costs and higher prices.
Russia-Ukraine war has “upended the world order”It has been in force since the Cold War, and BlackRock must adjust accordingly. “long-term structural changes,”Fink stated that this could include deglobalization or higher inflation. He added that central banks will have to either accept increased inflation – even beyond the 40-year high that was set last month in the US – or reduced economic activity and employment.
New York-based BlackRock handles $10 trillion in assets, making it the world’s largest money manager, so Fink’s views are closely watched by investors. The fact is that the billionaire holds so much financial power, his thoughts may be self-fulfilling. He said that he saw the Ukraine crisis as accelerating digital currency development and speedsing up the transition away from fossil fuels.
“The ramifications of this war are not limited to Eastern Europe,”Fink stated. “They are layered on top of a pandemic that has already had profound effects on political, economic and social trends. The impact will reverberate for decades to come in ways we can’t yet predict.”
Although Fink and Russian leaders don’t see eye-to-eye on the Ukraine conflict – the money manager blames Moscow for causing the crisis – they agree that the world order is changing. Russian President Vladimir Putin said last week that sanctions against Moscow mark the end of an era, portending an end to the West’s “global dominance”Both economically and politically. These comments were repeated by Dmitry Medvedev, the ex-President, this week. “The unipolar world has come to an end.”