happening. it is no longer a question of ‘ whether it will happen ’ but ‘ how much ’ and ‘ how fast ’. the trajectory of both physical and transition risks is highly uncertain. global carbon emissions have not peaked. at the same time, commitments towards achieving netzero have never been stronger, foreshadowing stronger policy actions and growing clean energy investments. it is within this wide spectrum of possible outcomes that investors will need to make portfolio allocation decisions. investment pivots for portfolio resilience against the backdrop of these four short - term to long - term uncertainties, the overall investment environment has deteriorated. return prospects are lower, and risks are higher. bright spots exist but they are more segmented and there is a need to seek them out more carefully. this environment presents an opportunity for private capital to shine. private equity ( pe ) and venture capital ( vc ) managers are more nimble than investors in public markets. they can focus on investment themes in differentiated market segments and high growth markets to add diversification and enhance portfolio resilience. let me suggest three pivots for private market investment strategies in the uncertain environment ahead. one, pivot from growth to sustained profitability ; two, pivot to south and southeast asia as key growth markets ; three, pivot to private credit as a new avenue for capital ; pe / vc managers are increasingly prioritising profitability over growth. more managers are rightly focused on selecting companies with strong balance sheets, low burn rates, and good prospects for profitability in an environment of lower growth, higher inflation and higher interest rates. as these shifts are being made to strengthen resilience, the industry can also position itself for more sustainable growth. compared to public equity investment managers, pe / vc managers typically have more control and influence over their portfolio companies, and greater access to information on their financial and sustainability performance. south and southeast asia are becoming one of the most important regions for private market investment opportunities. last year, growth in pe / vc investments in india outpaced most major economies, including china. india and asean together accounted for almost 30 % of the record us $ 296 billion of private equity investments that poured into the asia - pacific region last year. south and southeast asia are among the most dynamic economic regions in the world. growth in these two regions is driven by favourable demographics, rising affluence, young tech - savvy consumers, and rapid urbanisation. asean is likely to benefit

a “ soft landing ”. what are the signs of hope? first, output gaps in the major economies are relatively modest and bringing aggregate demand and supply into balance may not require much more policy tightening. second, the recent moderation in global food and energy prices will help to ease overall inflationary pressures and help to prevent inflation expectations from rising. in fact, long - term inflation expectations appear to be well anchored. third, as suggested by recent research by the bank for international settlements ( bis ) [ 1 ], soft landings are more likely when the number of job vacancies is high and when policy tightening is front - loaded. these conditions seem to be in place, at least in the us economy. the bad scenario is a longer and deeper recession – a “ hard landing ”. what are the risks of this happening? first, as pointed out by the bis, when private sector debt levels are high, monetary policy tightening can trigger feedback loops through financial institutions and markets that intensify the downturn. the bis estimates that private debt service ratios in the advanced economies could rise sharply to pre - global financial crisis levels if policy rates were to increase by the same extent as the us fed ’ s tightening in 20042006. second, labour supply may continue to remain weak. labour force participation and non - resident labour flows may not fully recover to pre - pandemic levels. this means continued labour market tightness and wage pressures, and therefore more aggressive policy tightening to stabilise inflation. third, fresh supply disruptions from the war in ukraine remain a key risk. a cessation of gas supplies to europe will likely have strong knock - on effects on global energy prices. where is inflation headed in the medium term? the medium - term inflation outlook is likely to be “ higher - for - longer ” compared to the past decade of low and benign inflation. global inflation averaged 3. 8 % per annum during the last two decades ( 2001 - 2020 ). what will inflation be like over the next decade, after the current bout of high inflation is tamed? a fair guess is that we are likely to see more recurrent bouts of higher price increases compared to the last two decades. there are four structural factors underpinning this prognosis : supply chain developments ; labour market dynamics ; energy transition ; climate change impacts. first, the ongoing reconfiguration of global supply chains is likely to mean higher costs and hence prices, at least over the medium term.