The world hasn’t changed: Yetsenga

The global economy has not been fundamentally changed by the ongoing conflict in the Middle East, according to ANZ’s Richard Yetsenga, even if market reaction has been volatile.

While insisting the human cost was horrific and markets should never become desensitised to such a thing, Yetsenga told the audience at the 2026 ANZ Debt Conference he expected the economic resilience seen over the better part of the last decade to hold.

“The broad message is, I think, global resilience in the face of substantial shocks,” he said. “And we should be a bit used to it by now.

“I don't see anything which fundamentally shifts my view about the way the world is operating.”

Yetsenga, ANZ’s Chief Economist & Head of Research, said while many had pressed him about his general forecasts since the beginning of the conflict, in economic terms the impacts were ultimately more of the same.

The conflict occurred at a time when economies were already using industrial policy to build national resilience, for instance, and increasing their focus on defence spending, he said.

“The trends that were already there are being strengthened by the events of recent weeks,” Yetsenga said.

You can watch edited highlights of his presentation below.

{video}

Yetsenga also addressed the global artificial intelligence (AI) story, which in many ways he said would be more economically transformative than geopolitical concerns.

“I think what happens to the path of this AI investment boom is [ultimately] going to be a bigger issue for the global economy than geopolitics,” he said. “At least in terms of its direct impact on markets.”

AI has reenergised industry policy in economics around the world, Yetsenga said, particularly in the United States and its position on strategic competitor China. And Australia is by no means immune, he said,

“You cannot have a macro view on Australia or the world without having a view on what happens to this AI-investment theme,” Yetsenga said.

The rate of growth in the AI space, he admitted, does raise questions around how long the good times could last.

“In Asia, if you look at non-China trade, virtually all of the growth in what has been an export boom in the last two years is from electronics,” Yetsenga said.

“I am [taking an] educated guess about what happens, but it doesn't look sustainable to me.”

The irony, he said, is numerous economic factors, including changing demographics and growth demands, mean the global economy needs AI.

“I think the biggest risk is we don't embrace and we don't adopt,” Yetsenga said, “And actually we need to.”

Watch the video above to find out more.