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Good Things Happen is a podcast from Citi that addresses some of the greatest challenges facing the investing world and asks how we can come together to solve them. The sharpest minds from finance and beyond join host Jorian Murray to debate some of the biggest questions of our time .

Good Things Happen Season 3

Lord William Hague 

Lucy Baldwin is a Managing Director and Global Head of Markets Research and Equity Advisory. Lucy is responsible for managing Citi’s global independent research across all asset classes and for oversight of its global equity advisory business and associated equities client strategy. Lucy sits on the Equities Executive committee. 

Lucy joined Citigroup in April 2021 from Credit Suisse where she was Global Head of Equity Sales and member of the Global Equities Management committee. 

Prior to Credit Suisse Lucy was at Bank of America as Head of European Equity Sales (2015-2019) and at Goldman Sachs as a Director of European Equity Research and in a variety of research analyst roles (2006-2015). Lucy started her career at Cazenove as an equity research analyst covering the building materials sector. Lucy graduated from the University of Birmingham in Economics. 

Lucy is a member of the University of Birmingham Investment Sub-committee and Chairs the advisory board for Ark Curriculum Plus, an educational charity. 



Lucy Baldwin

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The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time. The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging — between new entrants and existing players, often with new business models — to seize a slice of the cross-border payments wallet. The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world. Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor. This report builds on qualitative contributions from key market infrastructure experts — from within and outside of Citi — FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi’s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences. We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack — including alternative payment methods and other industry-driven developments — and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market. While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape. As we show in this report, best-in-class client experiences — leveraging new technologies — can address clients’ key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments.

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time.
The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging &mdash; between new entrants and existing players, often with new business models &mdash; to seize a slice of the cross-border payments wallet.
The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world.
Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor.
This report builds on qualitative contributions from key market infrastructure experts &mdash; from within and outside of Citi &mdash; FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi&rsquo;s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences.
We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack &mdash; including alternative payment methods and other industry-driven developments &mdash; and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market.
While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape.
As we show in this report, best-in-class client experiences &mdash; leveraging new technologies &mdash; can address clients&rsquo; key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments.

Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi

Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>

<div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>

Growing Revenue Pie Is Attracting Competition

The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>

<div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>

The Pain Points

Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>

<div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>

Keys to Winning Share for Banks

Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>

<div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>

Where Are Clients on their API Journey?

Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

<div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

Delivering Best-in-Class Client Experiences

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time. The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging — between new entrants and existing players, often with new business models — to seize a slice of the cross-border payments wallet. The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world. Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor. This report builds on qualitative contributions from key market infrastructure experts — from within and outside of Citi — FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi’s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences. We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack — including alternative payment methods and other industry-driven developments — and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market. While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape. As we show in this report, best-in-class client experiences — leveraging new technologies — can address clients’ key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments. Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div> The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div> Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div> Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div> Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. A race is emerging between new entrants and existing players, often with new business models, to seize a slice of the cross-border payments wallet. The evolving landscape is driven by changing behaviors as the streamlined, transparent, 24x7 real-time payments experience of consumers is crossing over to the corporate and institutional client market Best-in-class client experiences, leveraging new technologies, can address clients' key pain points and have the potential to transform cross=border payments for the benefit of all.

Who Will Be Moving $250 Trillion in the Next Five Years?

Future of Cross-Border Payments 

The probability of a strong El Niño weather phenomenon is on the increase. El Niño - characterized by changes in air pressure and sea surface temperatures in the equatorial Pacific Ocean - started earlier this year and the probability of a strong phenomenon by the end of 2023 is now at 70%. Some impacts are already being felt across Latin America. These include: Chile and Peru have seen increased rainfall. That has impacted agricultural activity and prices. Peru’s fishing industry growth has slowed. Colombia’s government is preparing for possible energy shocks. Low water levels have limited activity through the Panama Canal. Rising average sea surface temperatures point to El Niño. © 2023 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: Citi Research, NOAA Probabilities of a strong event have been on the rise. © 2023 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: Citi Research, NOAA Historically, the phenomenon occurs irregularly every two to seven years, with asymmetrical impacts across the region. Two strong El Niño events have occurred in the past three decades, in 1997-98 and more recently in 2015. Other El Niño events have been milder (early and late 2000s, and at the end of the 2010s). The impact of El Niño is highly dependent on geography, with climate effects manifesting in different ways across the globe and within LatAm. The phenomenon is associated with higher-than-usual rainfall in Chile, Peru, most of Argentina, Southern Brazil, and Northern Mexico. On the other hand, some zones experience lower rainfall volumes and droughts, including Colombia, Central America and the Caribbean, Western parts of Argentina, Brazil’s agricultural belt, as well as the Centre/South of Mexico. “Dry” effects have impact on crops through lower irrigation, and on energy through reduced hydro generation and higher reliance on fossil fuels. “Wet” effects, particularly if strong, can lead to flooding in detriment of agriculture, and landslides can affect transportation. The broad effects for the region are summarised here: El Niño has an uneven impact in Latin America. © 2023 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: Citi Research These supply shocks suggest inflationary risks, although impact on activity could be more ambiguous. Milder events could also potentially be beneficial to growth, particularly in places where a moderate level of increased rainfall is welcomed. All told, the rising risk of a strong El Niño event this year at the very least sounds an alarm bell, in particular if the current disinflationary trend and early policy rate cutting cycles face a reversal. Inflationary impact Colombia and Brazil experienced higher inflation through the 2015 El Niño event. It took place against the backdrop of established inflation targeting regimes across the region, making it the best example, the analysts say, for possible impacts and policy responses this time around. In 2015, Brazil and Colombia experienced heightened inflation pressures coinciding with the event. Sea surface temperature markers surpassed the 1 degree mark in 2Q15. Inflation was already high in Brazil by then, while inflation in Colombia started rising soon after. The shock playing through higher inflation is clearer for both countries when looking at the food subcomponent of CPI. However, Chile, Mexico, and Peru did not experience such a shock. Chile witnessed a drop in food inflation. While this case is by no means conclusive of how shocks play out, it does show that effects do not necessarily play out as expected and that each event has idiosyncrasies. It is also worth noting that, soon after the climatic event waned, food inflation retraced in Brazil and Colombia with around a six-month lag in both cases. This suggests that, at least in 2015, the shock on inflation was temporary. In the current context, an inflation shock would slow, though not revert, regional cutting cycles if expectations are affected. If an El Niño shock leads agents to increase longer-term expectations once again, a policy response is possible. That said, the low-growth outlook and core inflation adjustment should still prompt central banks to ease their policy stances, the report says. The analysts say that if there is a policy response this time around, this would likely include central banks slowing the pace of cutting cycles and, at most, a mid-cycle pause. They say they continue to believe terminal rates will depend more on international monetary conditions and how DM central banks ultimately behave through 2024 and 2025. For more information on this subject, and if you are a Velocity subscriber, please see the full report, published on 28 September 2023, here: Latin America Economic Outlook & Strategy - El Niño on the Horizon Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.

The probability of a strong El Ni&ntilde;o weather phenomenon is on the increase. El Ni&ntilde;o - characterized by changes in air pressure and sea surface temperatures in the equatorial Pacific Ocean - started earlier this year and the probability of a strong phenomenon by the end of 2023 is now at 70%.
Some impacts are already being felt across Latin America. These include:
<ul>
<li>Chile and Peru have seen increased rainfall. That has impacted agricultural activity and prices.</li>
<li>Peru&rsquo;s fishing industry growth has slowed.</li>
<li>Colombia&rsquo;s government is preparing for possible energy shocks.</li>
<li>Low water levels have limited activity through the Panama Canal.</li>
</ul>
&nbsp;Rising average sea surface temperatures point to El Ni&ntilde;o. 
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/65202b2eebfee87db03e5d94.png" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, NOAA
Probabilities of a strong event have been on the rise. 
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/65202bacebfee87db03e5d97.png" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, NOAA
Historically, the phenomenon occurs irregularly every two to seven years, with asymmetrical impacts across the region. Two strong El Ni&ntilde;o events have occurred in the past three decades, in 1997-98 and more recently in 2015. Other El Ni&ntilde;o events have been milder (early and late 2000s, and at the end of the 2010s).
The impact of El Ni&ntilde;o is highly dependent on geography, with climate effects manifesting in different ways across the globe and within LatAm. The phenomenon is associated with higher-than-usual rainfall in Chile, Peru, most of Argentina, Southern Brazil, and Northern Mexico.
On the other hand, some zones experience lower rainfall volumes and droughts, including Colombia, Central America and the Caribbean, Western parts of Argentina, Brazil&rsquo;s agricultural belt, as well as the Centre/South of Mexico.
&ldquo;Dry&rdquo; effects have impact on crops through lower irrigation, and on energy through reduced hydro generation and higher reliance on fossil fuels. &ldquo;Wet&rdquo; effects, particularly if strong, can lead to flooding in detriment of agriculture, and landslides can affect transportation. The broad effects for the region are summarised here:
El Ni&ntilde;o has an uneven impact in Latin America. 
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/65202d73f4a85a028b1722f1.png" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research 
These supply shocks suggest inflationary risks, although impact on activity could be more ambiguous. Milder events could also potentially be beneficial to growth, particularly in places where a moderate level of increased rainfall is welcomed. All told, the rising risk of a strong El Ni&ntilde;o event this year at the very least sounds an alarm bell, in particular if the current disinflationary trend and early policy rate cutting cycles face a reversal.
Inflationary impact 
Colombia and Brazil experienced higher inflation through the 2015 El Ni&ntilde;o event. It took place against the backdrop of established inflation targeting regimes across the region, making it the best example, the analysts say, for possible impacts and policy responses this time around. &nbsp;
In 2015, Brazil and Colombia experienced heightened inflation pressures coinciding with the event. Sea surface temperature markers surpassed the 1 degree mark in 2Q15. Inflation was already high in Brazil by then, while inflation in Colombia started rising soon after. The shock playing through higher inflation is clearer for both countries when looking at the food subcomponent of CPI.
However, Chile, Mexico, and Peru did not experience such a shock. Chile witnessed a drop in food inflation. While this case is by no means conclusive of how shocks play out, it does show that effects do not necessarily play out as expected and that each event has idiosyncrasies.
It is also worth noting that, soon after the climatic event waned, food inflation retraced in Brazil and Colombia with around a six-month lag in both cases. This suggests that, at least in 2015, the shock on inflation was temporary. In the current context, an inflation shock would slow, though not revert, regional cutting cycles if expectations are affected.
If an El Ni&ntilde;o shock leads agents to increase longer-term expectations once again, a policy response is possible. That said, the low-growth outlook and core inflation adjustment should still prompt central banks to ease their policy stances, the report says.
The analysts say that if there is a policy response this time around, this would likely include central banks slowing the pace of cutting cycles and, at most, a mid-cycle pause. They say they continue to believe terminal rates will depend more on international monetary conditions and how DM central banks ultimately behave through 2024 and 2025.
For more information on this subject, and if you are a Velocity subscriber, please see the full report, published on 28 September 2023, here: <a href="https://www.citivelocity.com/t/r/eppublic/2pmi3" target="_blank" rel="noopener" data-link-source="tiny">Latin America Economic Outlook &amp; Strategy - El Ni&ntilde;o on the Horizon</a>
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research’s Ernesto Revilla looks at how a strong showing by the infamous weather phenomenon this year could affect the economies of Latin America. 

El Niño Rising 

Commodities are muddling through economic weakness, weather and politics. Citi’s analysts note that commodity demand growth looks likely to significantly fall year on year in the fourth quarter; economic growth and trade are the main drivers of this demand, and Citi sees global growth falling to 1.7% in 2024 while trade continues to stagnate. The new Citi Research report notes that the U.S., China and the EU are all confronting headwinds following a year that’s seen U.S. growth surprise to the upside, China’s post-pandemic reopening fail to drive a rebound, and euro-area growth come in weaker than projected. Meanwhile, global trade’s early 2023 rebound has slowed, with a de-diversification in trade seen and expected to dominate the rest of the year and much of 2024 alongside the growth slowdown. To this mix add the wildcards of weather and politics. An Atlantic Basin hurricane entering the Gulf of Mexico could impact global markets for weeks or even months, raising the critical question of whether El Niño weather patterns continue to safeguard this region. And winter’s severity also stands as an issue of concern. Meanwhile, geopolitics have weighed significantly on commodities, in part because of Russia’s role as the world’s largest and most diversified exporter. The report says events involving Russia can affect natural gas, crude oil, grains, timber, metals, diesel and gasoline prices; Russia’s decision in accord with Saudi Arabia to keep oil off markets through year’s end has been a singular factor in raising oil prices by some $20 a barrel or more. Given such an environment, the authors note, they expect commodities performance to remain divergent and possibly volatile through the fourth quarter. Given China’s importance, its situation deserves a closer look. The authors note stronger imports across various commodities, which likely reflect commodity-specific or seasonal factors, such as inventory builds, hot weather and opportunistic buying. Some data signal that China’s manufacturing sector is performing better than expected, but the property market remains weak and the team is uncertain about how effective China’s latest stimulus measures will be. Energy: Oil prices have rallied in the third quarter due to Saudi Arabia and Russia extending voluntary production cuts through to December. But in projecting global oil balances, the authors expect a swing from a 1.5 million barrels a day stock draw in the third quarter to a stock build of at least 0.2 million barrels a day in the fourth, reflecting more and more oil coming into the market. Higher near-term oil prices could make for more downside next year, and the authors note that demand looks constrained while non-OPEC+ supply is growing. They also point out that bullish risks remain for crude and diesel, with everything from labor strikes and geopolitics to weather as potential factors. But there are bearish risks as well, including mild winter weather and macro risks to demand. Uranium: Uranium prices crossed $70 a pound earlier than the authors originally thought, with the team’s price outlook revised since global uranium supplies are now expected to be less than previously forecast. For more information on this subject, if you are a Velocity subscriber, please see the full report, first published on October 2nd here Muddling Through Economic Weakness, Weather and Politics. Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.

Commodities are muddling through economic weakness, weather and politics. &nbsp;
Citi&rsquo;s analysts note that commodity demand growth looks likely to significantly fall year on year in the fourth quarter; economic growth and trade are the main drivers of this demand, and Citi sees global growth falling to 1.7% in 2024 while trade continues to stagnate.
The new Citi Research report notes that the U.S., China and the EU are all confronting headwinds following a year that&rsquo;s seen U.S. growth surprise to the upside, China&rsquo;s post-pandemic reopening fail to drive a rebound, and euro-area growth come in weaker than projected. Meanwhile, global trade&rsquo;s early 2023 rebound has slowed, with a de-diversification in trade seen and expected to dominate the rest of the year and much of 2024 alongside the growth slowdown.
To this mix add the wildcards of weather and politics. An Atlantic Basin hurricane entering the Gulf of Mexico could impact global markets for weeks or even months, raising the critical question of whether El Ni&ntilde;o weather patterns continue to safeguard this region.
And winter&rsquo;s severity also stands as an issue of concern. Meanwhile, geopolitics have weighed significantly on commodities, in part because of Russia&rsquo;s role as the world&rsquo;s largest and most diversified exporter. The report says events involving Russia can affect natural gas, crude oil, grains, timber, metals, diesel and gasoline prices; Russia&rsquo;s decision in accord with Saudi Arabia to keep oil off markets through year&rsquo;s end has been a singular factor in raising oil prices by some $20 a barrel or more.
Given such an environment, the authors note, they expect commodities performance to remain divergent and possibly volatile through the fourth quarter.
Given China&rsquo;s importance, its situation deserves a closer look. The authors note stronger imports across various commodities, which likely reflect commodity-specific or seasonal factors, such as inventory builds, hot weather and opportunistic buying. Some data signal that China&rsquo;s manufacturing sector is performing better than expected, but the property market remains weak and the team is uncertain about how effective China&rsquo;s latest stimulus measures will be.
Energy: Oil prices have rallied in the third quarter due to Saudi Arabia and Russia extending voluntary production cuts through to December. But in projecting global oil balances, the authors expect a swing from a 1.5 million barrels a day stock draw in the third quarter to a stock build of at least 0.2 million barrels a day in the fourth, reflecting more and more oil coming into the market. Higher near-term oil prices could make for more downside next year, and the authors note that demand looks constrained while non-OPEC+ supply is growing. They also point out that bullish risks remain for crude and diesel, with everything from labor strikes and geopolitics to weather as potential factors. But there are bearish risks as well, including mild winter weather and macro risks to demand.
Uranium: Uranium prices crossed $70 a pound earlier than the authors originally thought, with the team&rsquo;s price outlook revised since global uranium supplies are now expected to be less than previously forecast.
For more information on this subject, if you are a Velocity subscriber, please see the full report, first published on October 2nd here <a href="https://www.citivelocity.com/t/r/eppublic/2pzRs" target="_blank" rel="noopener" data-link-source="tiny">Muddling Through Economic Weakness, Weather and Politics</a>.
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research’s Edward Morse and team looks at the challenges that will likely dictate commodities trends into next year, focusing on the wildcards of weather and geopolitics. 

Commodities: Weakness and Weather 

This calls for a fundamental remodelling of the state

The former UK Foreign Secretary says embracing the opportunities and confronting the threats of artificial intelligence will be vital to future competitiveness and will mean ripping up the playbook - reimagining governments and societies.    

Lord Hague on AI and Government Policy

The transition away from “Africa Rising” story in search of transformative growth and change. How African governments and the private sector need to work together for a “New Growth Mode”’ to emerge. The role of infrastructure and commodities in the changing growth story across the continent. Africa’s unique demographics and the challenges they pose to policy makers in framing development agendas. The importance of improving fiscal discipline and exchange rate flexibility for growth to pick up and to increase resilience against future economic shocks.

<ul type="disc">
<li>The transition away from &ldquo;Africa Rising&rdquo; story in search of transformative growth and change.</li>
<li>How African governments and the private sector need to work together for a &ldquo;New Growth Mode&rdquo;&rsquo; to emerge.</li>
<li>The role of infrastructure and commodities in the changing growth story across the continent.</li>
<li>Africa&rsquo;s unique demographics and the challenges they pose to policy makers in framing development agendas.</li>
<li>The importance of improving fiscal discipline and exchange rate flexibility for growth to pick up and to increase resilience against future economic shocks.</li>
</ul>

David Cowan, Emerging Markets Economist, Citi Research discusses  the ongoing resilience in the Africa growth story based on the continent’s favourable demographics, technological developments and a changing world economy.

Africa: A New Growth Model

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception. Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new “normal.” The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors’ response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility — total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries. Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally “philanthropic” countries — like the U.S. and Western Europe — which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so. As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends — and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead. This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: Opportunities in a World of Transition and Reinventing Giving in Challenging Times. This year’s report is again produced in partnership with Citi Private Bank’s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors.

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception.
Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new &ldquo;normal.&rdquo; The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors&rsquo; response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility &mdash; total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries.
Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally &ldquo;philanthropic&rdquo; countries &mdash; like the U.S. and Western Europe &mdash; which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so.
As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends &mdash; and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead.
This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: <a href="https://www.citigroup.com/global/insights/citigps/philanthropy" target="_blank" rel="noopener" data-link-source="tiny">Opportunities in a World of Transition</a> and <a href="https://www.citigroup.com/global/insights/citigps/philanthropy-and-the-global-economy-v2" target="_blank" rel="noopener" data-link-source="tiny">Reinventing Giving in Challenging Times</a>. This year&rsquo;s report is again produced in partnership with Citi Private Bank&rsquo;s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors.

Charitable Sentiment Remains High Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19.

Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19.

Charitable Sentiment Remains High

U.S.: An Increasingly Affluent and Institutional Donor Base the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations.

the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations.

U.S.: An Increasingly Affluent and Institutional Donor Base

Stronger Connections Through Technology Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey.

Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey.

Stronger Connections Through Technology

Trends in International Giving An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

Trends in International Giving

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception. Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new “normal.” The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors’ response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility — total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries. Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally “philanthropic” countries — like the U.S. and Western Europe — which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so. As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends — and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead. This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: Opportunities in a World of Transition and Reinventing Giving in Challenging Times. This year’s report is again produced in partnership with Citi Private Bank’s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors. Charitable Sentiment Remains High Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19. U.S.: An Increasingly Affluent and Institutional Donor Base the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations. Stronger Connections Through Technology Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey. Trends in International Giving An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

Prosocial attitudes continue to thrive globally, but giving trends changed in 2022 compared to 2021. Some countries saw an uptick in charitable giving following the invasion of Ukraine, while others saw headline figures fall below pandemic-related highs. In the U.S., giving is becoming more institutional, with the nonprofit and for-profit sectors moving closer together in mission purpose, business models, and partnerships. International giving is also becoming more "local' to beneficiaries.

Perspectives on the Future of Giving

Prosocial attitudes continue to thrive globally, but giving trends changed in 2022 compared to 2021. Some countries saw an uptick in charitable giving following the invasion of Ukraine, while others saw headline figures fall below pandemic-related highs. 

Philanthropy and the Global Economy v3.0

Thank you for joining us at Citi&rsquo;s Leaders of Tomorrow Conference.&nbsp;
Throughout the afternoon you will hear from representatives from both the industry and Citi, who will discuss their global views across the different asset classes and cover a wide range of pressing issues facing the asset management industry.
This is a great opportunity to build relationships with your peers from across the industry and meet representatives from Citi.
We hope you find today&rsquo;s event insightful and valuable.

13:45-14:00: Arrival and Registration

14:00-14:10: Welcome Remarks

14:10-14:55: The Geopolitical Landscape

14:55-15:25: Industry Review and Future Trends

15:25-16:05: Global Macro Opportunities:  Commodities, Rates and FX

16:05-16:35: Coffee Break

16:35-17:05: Fundamentals 101: Equities and Emerging Market Credit

17:05-17:45: In Conversation Martin Pabari, CEO, EMEA, Millennium and Lucy Baldwin, Global Head of Markets Research and Equity Advisory, Citi

17:45-17:55: Closing Remarks

18:00-20:30: Drinks & Canapé Reception at Market Halls Canary Wharf

Welcome to Citi’s Leaders of Tomorrow Conference

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Vincent Vandenbroucke

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