BlackRock CEO Larry Fink said that Russia’s invasion of Ukraine meant the end of globalization the world enjoyed the last 30 years.
Fink, the CEO of the world’s largest asset manager, warned of further inflation affecting the world’s economy.
It’s the End of Globalization
Fink warned of more problems ahead for the world’s economy. In particular, the BlackRock CEO said that inflation will remain a major problem in the days to come.
He said that the Russia-Ukraine war is now forcing countries to reassess their dependence on other countries. This means that many economies will now attempt to overhaul local manufacturing.
In addition, Fink said that Russia’s moves resulted in its “subsequent decoupling” from the world economy.
This prompted companies and governments to “re-evaluate their dependencies and re-analyze their manufacturing and assembly footprints”. Fink added that this return to self-reliance is something that the COVID pandemic initiated.
Oaktree Capital Agrees With BlackRock, End of Globalization Is Near
Another major investment firm, Oaktree Capital Management, agreed that the end of globalization is near. The company issued a similar warning to its investors.
Co-founder and chairman Howard Marks also warned that inflation is now likely a long-term consequence.
He said that with the resurfacing of globalization’s negative aspects, countries are now looking back to local sourcing. Instead of the cheapest sources, a premium is now placed on “the safest and surest,” she said.
The invasion of Ukraine prompted a strong retaliatory response from the United States and the European Union. Prior to Russia’s military adventurism, the world was already experiencing hardships due to limited oil supplies amid heavy demand.
Many economies have recently re-emerged from the pandemic. However, inflation and supply chain disruptions are causing problems.
Then, the West imposed crippling economic sanctions on Russia, which is the world’s second largest oil producer. This accelerated the rise in energy prices and exacerbated the oil supply crunch.
Economic War On Russia Signals End of Globalization
Meanwhile, Fink believes that the sanctions against Russia are the equivalent of an economic war against the country. BlackRock will continue to assess the effects of this crisis on its investors’ bottom lines.
With assets totaling $10 trillion, the company said that it already suspended the purchase of Russian equities.
Fink added that he is continually talking to stakeholders over how to prevent capital deployment to Russia. The war marked a turning point in Russia’s journey from isolation to globalization and now back to isolation.
“I remain a long-term believer in the benefits of globalization and the power of global capital markets,” Fink wrote. Access to global capital allows companies to sustain growth.
At the same time, countries increase their economic development and more people experience improved financial well-being.
Watch the CNBC Television news video reporting that BlackRock CEO Larry Fink releases an annual letter to shareholders:
Do you agree that the Russia-Ukraine war signals the end of globalization? Will the US and other countries start looking inwardly for their manufacturing requirements?
Let us know what you think. Share your thoughts in the comments section?