Global Risk Indexes (19-01-2025)

Global 96 (-1 ▼)
MENA 96 ( —)
APAC 98 ( —)
Europe 98 ( —)
Africa 92 (-1 ▼)
AMERs 98 ( —)
Markets 95 (-2 ▼)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Trade Wars, Energy Strains, and Fiscal Fragility: Global Markets in a Multipolar Crisis

The global economic order is experiencing profound disruptions as geopolitical ambitions collide with economic vulnerabilities. The week saw the revival of aggressive U.S. tariffs targeting China, Canada, and Mexico, signaling a resurgence of protectionism. This development risks fracturing critical global supply chains, particularly in technology, agriculture, and automotive sectors. Retaliatory measures by key trading partners are likely to exacerbate inflationary pressures and economic decoupling.

Energy markets remained at the heart of economic and geopolitical tensions. The United States' expansion of sanctions on Russian oil, coupled with disruptions in the Red Sea due to Houthi attacks, has driven crude prices above $80 per barrel. Middle Eastern producers, constrained by OPEC agreements, have struggled to offset supply gaps. Meanwhile, Iraq's modest production increases offer only temporary relief, highlighting the precarious state of global energy security for major import-dependent economies.

China's strategic economic maneuvers have underscored its resilience amid growing challenges. Beijing's fiscal stimulus measures, coupled with anti-dumping duties, demonstrate efforts to stabilize domestic industries while countering Western containment strategies. However, its declining population presents significant long-term hurdles, threatening its labor force and consumption capacity. The revival of the Belt and Road Initiative and increased investments in Europe reflect a calculated effort to secure influence in strategic regions.

Fiscal and structural challenges in advanced economies have intensified. Italy's public debt exceeding '3 trillion has raised alarms over eurozone stability, with potential spillover effects across European financial systems. Similarly, the U.K. continues to face fiscal pressures, as underwhelming retail performance and political uncertainty weigh on investor sentiment. The eurozone's growth outlook remains dampened by energy costs and inflationary pressures, further complicating recovery trajectories.

Emerging markets have demonstrated mixed resilience. Argentina's record trade surplus highlights the opportunities for resource-rich nations to capitalize on shifting trade dynamics, yet rising imports and inflation threaten long-term stability. Similarly, Turkey's M&A resurgence reflects renewed investor confidence, though geopolitical instability and fiscal pressures remain limiting factors.

Technological decoupling has become a defining feature of geopolitical rivalries. The U.S. and EU have tightened restrictions on Chinese technology exports, while the Netherlands has selectively disclosed dual-use technologies. These developments signify deepening fractures in global technological alliances, with significant implications for innovation and supply chains.

Strategic adaptation is paramount for stakeholders navigating this volatile environment. Policymakers must prioritize enhancing energy security, diversifying trade and investment partnerships, and addressing fiscal vulnerabilities. For investors, sectors like renewable energy, critical minerals, and advanced technology remain key opportunities in the context of structural realignments. Proactive and collaborative strategies will be essential to mitigate the risks of a multipolar economic crisis.

Geopolitical Risk Assessment for the Global Markets
(19-01-2025)

The global economy has faced a week marked by escalating trade tensions, energy market disruptions, and systemic challenges in major economies. U.S. trade policies and sanctions have amplified global supply chain fragmentation, while energy security remains precarious due to geopolitical instability in critical regions. Simultaneously, advanced and emerging economies grapple with fiscal pressures and structural vulnerabilities. Policymakers and investors must navigate an increasingly fragmented global landscape defined by resource competition, technological decoupling, and shifting alliances.

Geopolitical Risk Index

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

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