Geopolitics Surpasses Inflation as Top Sovereign Risk, Report Finds

According to a recent survey by Invesco, geopolitical risks have overtaken inflation as the primary concern for sovereign wealth funds and central banks, which manage approximately $22 trillion in assets. This shift underscores growing global uncertainties overshadowing economic pressures.

The report, which surveyed 83 sovereign wealth funds and 53 central banks, highlights that escalating geopolitical tensions — including conflicts, trade disputes, and political instability — are now viewed as the leading threat, with 83% of respondents listing geopolitical tensions as their top near-term concern. Over the long term, geopolitical fragmentation and protectionism are top worries for 86% of respondents, and climate change is identified as the second-biggest risk.

In response to geopolitical risks, 56% of central banks have increased their gold purchases to mitigate the “potential weaponisation” of reserves. Emerging markets are seen as potential beneficiaries of these geopolitical shifts, with India, Mexico, Brazil, Indonesia, and South Korea highlighted as attractive investment opportunities.

For more details, read the full article on Reuters.