Welcome to the G130+

Laurent Bouvier
May 18
3 min read

Understanding U.S. economic trends has been sufficient to gauge global economic trajectories for much of the post-war era. Given the current wave of deglobalization, it is becoming increasingly important to consider each economic bloc independently. In this context, what to make of the Global South?

The term ‘Global South’ (GS)1 traces back to the Non-Aligned Movement of the 1960s. In a post-colonial world, newly independent nations sought to resist affiliation with the Cold War blocs. A challenge to the Global North-led global order and growing self-assertiveness continue to define the GS.

For decades, the Global South has sought to distance itself from the derogatory ‘Rest of the World' designation that makes it sound like a collection of rounding errors. An increasingly polarized world may now enhance its relative power, as suggested by many pundits, often with a touch of humanistic romanticism à la Martin Milan, one of my youth's comic book heroes.

To their credit, members of the GS have effectively avoided alignment with the power blocs of the Global North. Indeed, they appear to have skillfully cultivated non-exclusive ties with China, Russia, and the U.S. as trading partners, sources of domestic investment, and arms suppliers.

Besides, the GS possesses substantial resources, including two-thirds of the world’s working-age population, and access to approximately 40% of global energy and transition metals.

Driven by demographic trends and economic development and increasingly interconnected through trade, the GS exhibits a growth rate more than double that of the ‘Global North’, in aggregate.

Finally, the region’s geopolitically neutral status positions it as a natural candidate for new manufacturing hubs as global supply chains diversify. This shift could represent an opportunity for Europe to deepen its economic ties with the GS nations as the US appears to retreat from them.

However, numerous challenges exist. The heterogeneity of economic and political models—commodity-based versus manufacturing-led, autocracy versus democracy —demands a granular lens.

In addition, many countries in the GS are at heightened risk from climate change, particularly in Africa, where they face extreme weather events that threaten livelihoods and development gains.

Lastly, political instability represents another significant challenge, disrupting economic progress.

The long-term underperformance of the MSCI Frontier Market Index, an imperfect but acceptable proxy for the GS, indicates that headwinds have structurally outweighed tailwinds.

So, will the GS seize the opportunity to shape the new global order as the Global North searches for its soul? The idea of a strong, unified GS is appealing. Judging by the stock market’s outperformance of the proxy index since the beginning of the year, the market wants to believe.

Yet, the GS history is replete with false dawns. From an M&A perspective, I would continue to privilege Global North targets with established exposure in the Global South over Global South targets. However, as the global order is being redefined, all opportunities in the GS must be examined and monitored with fresh eyes and an open mind.

Defined here as low and middle-income countries from Asia (excluding China), Latin America, the Middle East, and Africa

Welcome to the G130+

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