Global Risk Indexes (08-01-2025)

Global 95 (+1 ▲)
MENA 99 (+1 ▲)
APAC 97 ( —)
Europe 97 (+1 ▲)
Africa 87 ( —)
AMERs 96 (+2 ▲)
Markets 92 (-1 ▼)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

Empowering minds, shaping decisions: Insights from the heart of geopolitics

Asia-Pacific Dynamics: Leadership Instability, Strategic Competition, and Economic Strains Reshape Regional Landscape

The Asia-Pacific is grappling with critical intersections of political instability, strategic power maneuvers, and economic recalibrations, marking a pivotal moment for the region's trajectory.

South Korea's ongoing leadership paralysis deepened with the re-issuance of an arrest warrant for impeached President Yoon Suk Yeol. The political standoff is no longer just a domestic crisis but a regional risk. The governance vacuum undermines Seoul's capacity to address security challenges, particularly with North Korea's escalating provocations and China's strategic assertiveness. The economic repercussions are also notable, as investor confidence falters and key industries, like technology, face mounting pressures in the face of global economic uncertainty.

North Korea's hypersonic missile test this week signals its intent to assert strategic dominance amidst shifting regional alliances. By leveraging advanced missile technology and deepening military cooperation with Russia, Pyongyang is actively reshaping Northeast Asia's security dynamics. The timing of the launch, coinciding with U.S. diplomatic engagements, underscores a deliberate strategy to counterbalance American influence in the region.

China's continued use of grey-zone tactics against Taiwan was highlighted by the suspected sabotage of undersea communication cables. This act, paired with ongoing cyber offensives, reflects Beijing's integrated approach to undermining Taiwan's sovereignty while testing the resolve of regional actors. Taiwan's outreach to South Korea for cooperation exemplifies the growing need for multilateral frameworks to address asymmetric threats effectively.

Meanwhile, Malaysia's ambitious tax incentives in its special economic zone with Singapore demonstrate a proactive economic strategy aimed at fostering high-tech innovation and cross-border investment. However, the program's success will depend on its ability to attract sustainable foreign investment amidst regional competition for similar initiatives.

In Southeast Asia, Indonesia's expansive free school meals program, now targeting 80 million children and pregnant women, highlights the country's growing emphasis on domestic welfare initiatives. Yet, the $28 billion cost raises concerns about fiscal sustainability, especially as Jakarta seeks to reduce dependence on imports through an ambitious cattle-breeding program. This signals a broader trend of economic self-reliance amidst global trade uncertainties.

Vietnam, facing its largest-ever trade surplus with the U.S. amid a record-low dong, finds itself at the crossroads of economic opportunity and geopolitical risk. President-elect Donald Trump's threats of new tariffs could severely impact Hanoi's export-reliant economy, making Vietnam a focal point in the evolving U.S.-China-Vietnam trade triangle. This underscores the need for adaptive monetary policies to counter external shocks and sustain growth.

The Asia-Pacific's trajectory in 2025 will hinge on how effectively regional and global actors address the intersection of leadership crises, strategic competition, and economic realignments. The stakes are high, and missteps could lead to profound and lasting instability.

Geopolitical Risk Assessment for the Asia Pacific
(08-01-2025)

The Asia-Pacific region remains in a high-risk environment as intensifying leadership crises, strategic power realignments, and economic adjustments create a volatile geopolitical landscape. These dynamics signal significant challenges for regional stability and global governance frameworks.

Geopolitical Risk Index

Developments to Follow for the Asia Pacific (See All Global)

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