Global Risk Indexes (16-01-2025)

Global 96 (0 —)
MENA 97 (-1 ▼)
APAC 98 ( —)
Europe 98 ( —)
Africa 89 (-1 ▼)
AMERs 98 ( —)
Markets 93 (-1 ▼)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

Navigating Global Intersections: Where Trade, Finance, Energy and Geopolitics Converge

Sanctions, Resource Rivalries, and Political Instability Reshape Global Markets in 2025

Economic and geopolitical pressures are converging to redefine global markets, with energy, technology, and trade dynamics emerging as critical battlegrounds. The United States' expanded sanctions on Russia have intensified the scramble for alternative oil supplies, driving up premiums for Middle Eastern crude to multi-year highs. As India and China compete for available barrels, shipping costs have surged, straining global supply chains and inflating energy costs for import-reliant economies.

South Korea's political turmoil highlights the vulnerability of advanced economies to internal instability. The arrest of former President Yoon Suk Yeol and its ripple effects on the won have underlined how political crises can destabilize financial markets. With the Bank of Korea holding rates steady to stabilize the currency, South Korea faces a precarious balance between monetary easing and maintaining investor confidence in the face of weakening exports and capital flight.

China's strategic maneuvers in critical resources and European markets underline its intent to reshape global trade flows. Reports of Chinese interest in acquiring German automotive factories, alongside its focus on critical minerals, reflect Beijing's ambition to dominate high-value industries. This development poses strategic challenges for Europe, as Chinese electric vehicle makers could leverage such acquisitions to bypass EU tariffs and undermine local producers.

Technology remains at the heart of geopolitical rivalries. The European Union's robust enforcement of the Digital Markets Act and Digital Services Act, combined with U.S. technological export controls targeting China, underscore the deepening tech decoupling between global powers. Simultaneously, Taiwan's dominance in AI chip production through TSMC continues to cement its strategic importance amid escalating U.S.-China tensions.

Energy markets remain volatile as global demand rebounds. Brent crude has risen above $82 per barrel, supported by tighter supplies and increased demand from India and China. The improving inflation outlook in the U.S. and U.K. has provided temporary relief to financial markets, but concerns persist about the sustainability of energy price stability, particularly given the fragile ceasefire in Gaza and ongoing tensions in Eastern Europe.

Looking forward, stakeholders must adopt adaptive strategies to navigate these interconnected risks. Policymakers should prioritize fostering regional stability and securing critical supply chains. Investors need to monitor sectors like energy, technology, and emerging markets closely, as these areas are poised for significant transformations in the evolving geopolitical and economic landscape.

Geopolitical Risk Assessment for the Global Markets
(16-01-2025)

Global markets are operating in an environment of heightened systemic risk, driven by intertwining geopolitical and economic developments. U.S. sanctions on Russia and evolving energy markets are exacerbating supply chain disruptions and inflating premiums for Middle Eastern crude. Meanwhile, political instability in South Korea and looming trade tensions involving China, Europe, and North America underline the fragility of global economic integration. Short-term risks center on oil price volatility and debt challenges in emerging markets, while long-term risks focus on technological decoupling and the realignment of global alliances.

Geopolitical Risk Index

Developments to Follow for the Global Markets (See All Global)

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