The global economic dynamics portends subdued economic growth; elevated public and private debt levels and associated risks; low energy and commodity prices; changing nature of global trade; challenging investment environment; and heightened anxiety and perceived economic insecurity among the population around world. These dynamics have important implications for the role of Sovereign Wealth Funds (SWFs), including the nature and rate of growth in assets, asset allocation between domestic and global sectors, and stakeholder relations, particularly with their domestic population. This lecture discusses these interactions between global dynamics and the role of SWFs, including those SWFs whose asset accumulation is primarily dependent on energy and commodity sectors. This will stress on the rising importance of not having too large and too prolonged divergence between expenditure and revenue commitments of public sector budgets and their links with SWF assets and receipts.
Mukul G. Asher is Professorial Fellow, Lee Kuan Yew School of Public Policy, National University of Singapore. This article was first published in MyIndMakers on 30 March 2016.