Global Risk Indexes (21-01-2025)

Global 96 (0 —)
MENA 96 (+1 ▲)
APAC 97 (-1 ▼)
Europe 98 (-1 ▼)
Africa 94 (+1 ▲)
AMERs 97 (-1 ▼)
Markets 96 (+1 ▲)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Global Markets Face Volatility as Trade Wars and Energy Tensions Escalate in a Fragmented World Order

The global economy is grappling with the dual challenges of protectionism and resource nationalism, exacerbating vulnerabilities in trade, energy, and financial systems. The U.S. administration's proposed 25% tariffs on Canadian and Mexican imports, alongside potential levies on China, have deepened market volatility. These policies threaten to disrupt supply chains across key industries, heighten inflationary pressures, and sour relations with key trading partners.

Energy markets remain a focal point amid geopolitical instability. While U.S. sanctions on Russia continue to strain global oil supply chains, speculation about easing these measures in exchange for a Ukraine peace deal has added uncertainty. Meanwhile, Libya's plans to double oil production signal opportunities but remain contingent on fragile political conditions and infrastructure improvements. Declining Saudi exports to China underscore shifting energy trade dynamics, with Beijing increasingly favoring discounted Russian supplies.

China's economic trajectory reflects a mix of resilience and structural challenges. Beijing's strategic focus on the Belt and Road Initiative and efforts to diversify its economic partnerships underscore its ambition to counterbalance Western containment policies. However, demographic decline and declining consumption threaten long-term stability. The tentative rise in Chinese markets following U.S. tariff delays signals cautious optimism but highlights lingering uncertainties in U.S.-China relations.

Fiscal and structural vulnerabilities in advanced and emerging markets are growing. The European Union's consideration of a full ban on Russian aluminum imports underscores the bloc's alignment with U.S. policies but risks inflating costs for key industries. Italy's debt surpassing '3 trillion continues to undermine eurozone stability, while Egypt's recovery is constrained by inflation and fiscal tightness, despite IMF-backed reforms. In Asia, South Korea's economic recovery faces headwinds from political instability and slowing domestic demand.

Technological decoupling accelerates as geopolitical tensions deepen. Taiwanese firms' relocation of production away from China signals a strategic realignment of supply chains, driven by U.S. tariffs and China's focus on self-reliance. The European Union's tightening of regulations and China's push for indigenous technology development further highlight the fragmentation of global tech ecosystems.

Strategic adaptation is essential for navigating this multipolar economic order. Policymakers must prioritize securing critical supply chains, fostering energy resilience, and addressing demographic and fiscal imbalances. Investors should focus on sectors poised for growth, such as renewable energy, advanced technology, and critical minerals, while remaining vigilant to the risks of geopolitical disruptions and economic realignments.

Geopolitical Risk Assessment for the Global Markets
(21-01-2025)

Global markets are under acute strain from escalating trade tensions, energy market disruptions, and the compounding effects of structural weaknesses in major economies. Short-term risks are concentrated in currency volatility, inflationary pressures, and trade disruptions, while long-term challenges include technological decoupling, resource competition, and demographic crises. Policymakers and investors must navigate an increasingly fragmented global order defined by geopolitical competition and economic realignments.

Geopolitical Risk Index

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

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