Conflict in the Middle East is a real concern for markets, according to ANZ Chief Economist Richard Yetsenga — but markets have consistently seen off sizeable shocks for the better part of a decade.
Speaking on the sidelines of the 2026 ANZ Debt Conference, Yetsenga said while the human impact was tragic, the geopolitical dysfunction behind these events has become something economies have shown they can handle.
“This is the latest in a sequence of shocks over the last couple of years, and the global economy has been largely fine,” he told ANZ Institutional Insights. “The economy has shown itself to be incredibly resilient and there’s no reason to think this time will be different”
One thing we shouldn’t accept are the key factors driving that disfunction, Yetsenga said — among them, inequality.
“To quote Rutger Bregman, we shouldn’t lose the ambition to ‘make the world a better place’,” he said.
Outside of the conflict, Yetsenga told Insights, the most enduring uncertainties in the macroeconomy surround artificial intelligence (AI) and the fiscal direction of the United States.
What is certain though, he said, is ongoing strength in demand: “Assets and money market funds are really strong, reflecting the strength of balance sheets.”
A key factor driving that demand is industrial policy globally, Yetsenga said.
“And AI in the US is a form of industrial policy,” he said. “Ensuring an enduring advantage over geopolitical competitors means ‘winning’ the AI race.”
In Australia, the strength of demand is evident, Yetsenga said, including in infrastructure. Australia’s major project pipeline is expected to peak at $A105 billion in 2027/28, up from “a bit under $A40 billion” in 2021.
“Australia is running into capacity constraints, and that’s why there’s an increased focus on the Reserve Bank and interest rates,” he said.
More than 300 people attended the ANZ Debt Conference, including 130 issuers and 100 investors. Now in its 16th year, the conference is the largest of its kind in Australia.
