Global Risk Indexes (12-03-2025)

Asia-Pacific Faces Intensifying Political, Economic, and Security Shifts: Duterte’s ICC Trial, North Korea’s Missile Provocation, and U.S.-Asia Trade Conflicts

The Asia-Pacific is undergoing fundamental power shifts, with major developments in legal accountability, regional security, and economic policy. The transfer of former Philippine President Rodrigo Duterte to The Hague has ignited a domestic political crisis, while North Korea’s renewed missile activity underscores Pyongyang’s long-term strategy of coercion. In the economic sphere, U.S.-Asia trade tensions and China’s economic struggles continue to shape regional stability.

Duterte’s ICC Trial: A Legal and Political Reckoning

Rodrigo Duterte’s transfer to the International Criminal Court (ICC) represents an unprecedented moment in legal accountability, raising questions about the future of executive immunity in Southeast Asia. His arrest has triggered widespread protests in the Philippines, with his supporters denouncing the move as a violation of national sovereignty.

The case could have long-term ramifications beyond the Philippines. If the ICC pursues similar cases against other leaders accused of human rights abuses, it could alter the political landscape in Southeast Asia, potentially deterring future strongman governance. However, Duterte’s loyalist base remains a destabilizing force in Philippine politics, and his trial could polarize the country ahead of the 2025 elections.

North Korea’s Missile Provocation: Strategic Messaging or Tactical Escalation?

North Korea’s latest missile test has heightened regional security concerns, reinforcing its strategy of coercion and deterrence. Pyongyang is signaling that it remains a critical security disruptor, forcing its adversaries into a cycle of military posturing.

However, Pyongyang's calculus extends beyond military deterrence. With ongoing tensions between the U.S. and China, North Korea sees an opportunity to leverage geopolitical divisions to extract diplomatic and economic concessions. The U.S., South Korea, and Japan are expected to respond with enhanced military coordination, increasing the risk of miscalculation and conflict.

China’s Economic Stimulus: Temporary Stability or Structural Weakness?

China has introduced new fiscal stimulus measures to counter deflation, reinforcing its state-led economic model. While these measures may provide short-term relief, they come at a cost—excessive government intervention risks distorting market fundamentals and increasing financial fragility.

The Chinese leadership is caught in a dilemma: a more aggressive stimulus could inflate an already debt-laden economy, while a cautious approach risks deepening economic stagnation. If Beijing fails to restore consumer and investor confidence, regional supply chains will suffer, affecting economies that rely on Chinese demand.

U.S.-Asia Trade Frictions: Strategic Realignments Underway

U.S. tariffs on South Korean steel and Australian agricultural exports mark a shift in Washington’s economic engagement with Asia. While the U.S. remains committed to Indo-Pacific security cooperation, its trade policies are creating economic uncertainties for key allies.

South Korea and Australia are now considering diversification strategies, seeking alternative markets to reduce dependency on U.S. trade. This shift could lead to a longer-term reconfiguration of regional economic alliances, particularly if other Asian nations adopt similar hedging strategies.

Pakistan’s Balochistan Hostage Crisis: The Weakening Grip of the State

The hostage crisis in Balochistan highlights Pakistan’s deepening internal security challenges. The government’s inability to swiftly resolve insurgent threats is damaging its credibility, while growing economic instability compounds governance failures.

If Pakistan’s security environment continues to deteriorate, it risks further international isolation and declining investor confidence, exacerbating its financial crisis.

Southeast Asia’s EV Investment Boom: A New Industrial Era

Southeast Asia is accelerating investments in electric vehicle (EV) infrastructure, positioning itself as a global hub for clean energy manufacturing. Countries like Thailand, Indonesia, and Vietnam are aggressively pursuing policies to capture a share of the EV supply chain.

This transformation represents a major industrial realignment. If successful, Southeast Asia could challenge traditional automotive powerhouses, reshaping the global energy economy in the coming decades.

Looking Ahead: A Region in Transition

The Asia-Pacific is entering a new phase of political, economic, and security realignments. The coming months will be critical in determining whether these shifts lead to greater stability or deeper fragmentation.

Geopolitical Risk Assessment for the Asia Pacific
(12-03-2025)

The Asia-Pacific faces escalating geopolitical and economic volatility, with significant shifts in regional security, trade policies, and legal accountability. The transfer of former Philippine President Rodrigo Duterte to The Hague marks a landmark event in international justice, sparking domestic unrest and testing the Philippines' political stability. Meanwhile, North Korea's latest missile test reinforces its strategy of coercion, compelling the U.S., South Korea, and Japan to bolster military cooperation, increasing the risk of military escalation. Economic uncertainty persists as China intensifies fiscal stimulus measures to counter deflation, a move that may temporarily stabilize markets but raises concerns over long-term financial sustainability. Trade tensions are rising as the U.S. implements tariffs on South Korean steel and Australian agriculture, creating economic strain on key Indo-Pacific allies. Pakistan continues to grapple with a worsening security situation, exemplified by the hostage crisis in Balochistan, which exposes deepening governance challenges. Simultaneously, Southeast Asia is accelerating its transition toward electric vehicle (EV) production, signaling an industrial shift that could reshape regional supply chains. These developments suggest an increasingly fragmented Asia-Pacific landscape, with growing risks of economic realignment, strategic miscalculation, and heightened regional conflicts.

Geopolitical Risk Index

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

Previous Briefings

• Asia-Pacific Faces Intensifying Political, Economic, and Security Shifts: Duterte’s ICC Trial, North Korea’s Missile Provocation, and U.S.-Asia Trade Conflicts - (12-03-2025)
• Asia-Pacific Faces Economic and Political Uncertainty: China's Deflation Worsens, Duterte's Arrest Shakes the Philippines, and North Korea Escalates Tensions - (11-03-2025)
• Asia-Pacific Faces Economic and Political Shocks: China's Deflation Worsens, North Korea Escalates Tensions, and South Korea Faces Political Crisis - (10-03-2025)
• Asia-Pacific in Crisis Mode: China Expands Influence, Security Tensions Rise, and Economic Shocks Intensify - (09-03-2025)
• Asia-Pacific Faces Legal, Economic, and Security Challenges: Taiwan Warns Citizens Abroad, China-Canada Trade War Escalates, and Regional Crises Deepen - (08-03-2025)
• Asia-Pacific Confronts Security and Economic Shifts: New Zealand Warns of China’s Influence, U.S. Tariff Uncertainty, and Regional Military Realignments - (07-03-2025)
• Asia-Pacific Faces Economic and Security Challenges: U.S. Expands Trade Barriers, China Struggles with Deflation, and Regional Security Incidents Rise - (06-03-2025)
• Asia-Pacific at a Strategic Crossroads: China’s Military Expansion, South China Sea Confrontations, and Pakistan-Afghanistan Border Clashes - (05-03-2025)

See all previous briefings