The CEO of the investment arm of the world's largest sovereign wealth fund sees difficult times ahead for the global economy.
Norges Bank Investment Management (NBIM) CEO Nicolai Tangen told a Norwegian parliamentary hearing Tuesday that «we probably face the greatest changes for 30 years», according to a report in «Reuters» (behind paywall).
He added that the NBIM expects «growing frictions between superpowers and a reversal of globalization and predicted «we have a rocky ride ahead» with inflation, already rising before the Ukraine conflict, continues to increase.
Scenario of Stagflation
Tangen said of the many risk factors, stagflation is the worst potentially leading to a 40 percent decline in the fund, a scenario more likely than it was six months ago, he said. Norway's sovereign wealth fund has a value of $1.2 trillion.
He further outlined the scenario to «Reuters», saying that «We have a combination of high price rises and lower-than-before economic growth, inflation is going up and growth is on its way down», and potentially nearer to a scenario of stagflation than previously.
Nowhere to Hide
The fund was founded in 1996 and invests its oil and gas sector proceeds into the fund which holds states in over 9,000 companies around the world, owning 1.3 percent of all listed stocks.
Because of this, the fund «has nowhere to hide» and therefore has to manage the risk that comes with such exposure.
