These positive perspectives are counterbalanced by several notable risks. Elevated equity market valuations increase vulnerability to corrections, especially if corporate earnings disappoint. Geopolitical tensions remain a difficult-to-quantify risk, as they can directly affect energy prices, supply chains, and currencies. Moreover, there is a risk that inflation could reaccelerate due to rising wages or higher commodity prices. In such a scenario, central banks may be forced to maintain restrictive monetary policies for longer, which would particularly weigh on growth-oriented and interest-rate-sensitive sectors.
Sources: https://www.reuters.com/world | https://www.worldbank.org/en/research