00:00The global economy and our operating environment are being shaped by several major shifts.
00:07Geopolitics is no longer a backdrop to economic outcomes, but one of the main drivers.
00:14The model for international trade and rules of engagement are rapidly changing.
00:20Economic decisions are increasingly shaped by national security, technological competition, and supply chain resilience.
00:28The result is a world that is more geopolitically fragmented, but remains economically connected.
00:38Not only does this heighten uncertainties, but as the chart shows, shocks also are transmitted more quickly in this global
00:47landscape.
00:48We could see this shift in the rise of tariffs.
00:52Last year, in 2025, countries faced the prospect of sharp increases in U.S. tariffs.
00:58With some proposals exceeding even 20%.
01:02Much to our relief, the realized outcome was less severe than initially feared.
01:09Processes, exemptions, and negotiations softened the immediate impact, while front-loading boosted near-term trade volume.
01:17But the broader direction is clear.
01:21U.S. tariffs are now embedded in the global policy landscape.
01:25Firms now make investment decisions under persistent trade policy uncertainty.
01:31Supply chains are redesigned for resilience and strategic alignment, not just for efficiency and scale.
01:38And over time, this poses higher costs and a drag to global trade and investment.
01:45The second outcome, the resurgence of energy risk, amplified through geopolitical flashpoints.
01:53The conflict in the Middle East shows how quickly geopolitical events can spill into energy markets.
02:00The impact depends on the duration of conflict, the extent of damage to key infrastructure in particular, and the degree
02:08of disruption to global insights, to global logistics.
02:13And how is this transmitted to the world economy?
02:16First, higher oil prices and shipping insurance premiums raise costs, pushing inflation higher.
02:24Second, supply chain disruptions affect cross-border flows of goods and services, especially critical inputs for key sectors, weighing on
02:34growth and trade.
02:35And third, financial markets respond with higher risk aversion and tighter financial conditions.
02:42The negative impact to the global economy could also be amplified by the weaker sentiments.
02:48But we must also recognize that global energy sources are now more diversified, and strategic reserves are sizable.
03:00This ought to help mitigate some of the impact from the conflict.
03:06Nonetheless, we also see the continued surge in technology investments.
03:10Rapid advances in artificial intelligence are driving strong demand for semiconductors, data centers, and digital infrastructure.
03:20Some experts view that we are still in the early days of this technological advancement.
03:27This investment cycle has become a major source of support and a key reason the world economy has felt better
03:35than what we expected.
03:37In light of the challenges and heightened uncertainties, the global economy is expected to grow more moderately this year, at
03:48around 2.7% to 3.2%.
03:52Notwithstanding tariffs and geopolitical uncertainties, three factors should continue to support global growth.
04:00First, the sustained domestic demand.
04:03Second, the sustained economic policies.
04:07Second, the continued strong investment in technology, particularly the AI-related infrastructure.
04:15We recognize the outlook is highly uncertain, with the balance of risk tilted to the downside.
04:22Okay.
04:25I'll be right back.
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04:33Second,
04:33see. Second,
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