Global Risk Indexes (18-01-2025)

Global 97 (+1 ▲)
MENA 96 (-1 ▼)
APAC 98 ( —)
Europe 98 ( —)
Africa 93 (+2 ▲)
AMERs 98 (+1 ▲)
Markets 97 (+1 ▲)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Global Trade Wars, Energy Shocks, and Fiscal Challenges Reshape the Economic Order

The global economic and geopolitical order is under strain as protectionism, resource nationalism, and fiscal challenges converge. President Trump's imminent inauguration and his aggressive tariff agenda have already unsettled markets, with key trading partners preparing retaliatory measures. U.S. proposals to impose a 25% tariff on Canadian and Mexican goods and a 60% tariff on Chinese imports risk fracturing global supply chains, particularly in critical sectors like technology, agriculture, and automotive manufacturing.

Energy markets remain volatile amid sustained geopolitical disruptions. The U.S. sanctions on Russian oil and uncertainty in the Red Sea following Houthi attacks have elevated premiums on crude, pushing Brent crude above $80 per barrel. Iraq's plans to boost oil production offer limited relief, while Saudi Arabia's extended OPEC cuts exacerbate supply concerns. The resulting pressure on energy-import-dependent economies, particularly in Europe and Asia, underscores the fragility of global energy security.

China's economic strategy highlights a dual focus on domestic resilience and global influence. Beijing's fiscal stimulus and anti-dumping duties reflect its attempts to bolster domestic industries while navigating the challenges of demographic decline and trade realignments. The revival of the Belt and Road Initiative and strategic investments in Europe signal China's intent to counterbalance Western containment efforts, particularly in critical technologies.

Structural vulnerabilities in advanced economies are becoming increasingly pronounced. The IMF's downward revision of growth forecasts for Saudi Arabia and the eurozone underscores the impact of oil production cuts and fiscal constraints. Italy's rising debt-to-GDP ratio, now exceeding '3 trillion, poses systemic risks to eurozone stability, while the U.K. faces renewed fiscal pressures amidst political uncertainty and underwhelming retail performance.

Emerging markets are navigating a complex mix of opportunities and risks. Argentina's record trade surplus, driven by energy and agricultural exports, highlights the potential of resource-rich nations to capitalize on shifting trade dynamics. However, rising imports and inflationary pressures could undermine long-term fiscal stability. Similarly, Turkey's resurgence in M&A activity points to renewed investor confidence, though geopolitical instability remains a limiting factor.

The technological decoupling between major powers is accelerating. The European Union's tightening of digital regulations and U.S. restrictions on Chinese tech exports underline the fragmentation of technological alliances. These moves, coupled with the Netherlands' selective disclosures on dual-use technologies, reflect growing concerns over national security and economic competitiveness.

Policymakers and investors must prioritize resilience in an era of uncertainty. Governments should focus on securing critical supply chains, fostering multilateral collaboration, and addressing fiscal vulnerabilities. Investors should monitor sectors like renewable energy, advanced technology, and emerging markets for opportunities aligned with structural shifts. Navigating these intertwined risks requires an adaptive and forward-looking approach.

Geopolitical Risk Assessment for the Global Markets
(18-01-2025)

The global landscape remains fraught with interlinked challenges, including the escalation of trade conflicts under a Trump presidency, intensified energy market disruptions, and structural vulnerabilities in key economies. The revival of U.S. tariffs, geopolitical instability in the Middle East, and the fragmentation of technological alliances are amplifying systemic risks. In the short term, volatility will be concentrated in energy and trade markets, while the long-term outlook is shaped by technological decoupling, resource competition, and regional power shifts. The global economic order faces heightened uncertainty, demanding adaptive strategies from policymakers and investors.

Geopolitical Risk Index

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

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