Global Risk Indexes (22-01-2025)

Global 96 (0 —)
MENA 95 (-1 ▼)
APAC 96 (-1 ▼)
Europe 97 (-1 ▼)
Africa 94 ( —)
AMERs 96 (-1 ▼)
Markets 96 ( —)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Global Economy Faces Trade Escalations, Energy Volatility, and Shifting Alliances in a Multipolar World

Trade wars and protectionist policies are reshaping global economic dynamics. U.S. President Donald Trump's proposed tariffs on imports from Canada, Mexico, and China threaten to further fragment global supply chains. The automotive sector faces significant disruption, with multinational automakers bracing for higher costs and potential relocation of production facilities. The European Union and China are adopting defensive strategies, signaling the potential for retaliatory measures that could escalate global trade tensions.

Energy markets remain volatile as geopolitical factors weigh heavily on supply chains. Saudi Aramco's CEO expressed cautious optimism about oil demand growth but highlighted the impact of ongoing U.S. sanctions on Russian crude shipments. Speculation about easing these sanctions in exchange for a Ukraine peace deal has created uncertainty. Meanwhile, Libya's ambitious production targets offer limited relief amidst political instability and infrastructural limitations. The Red Sea shipping disruptions caused by Houthi attacks continue to strain global logistics and inflate freight costs, despite tentative hopes of easing tensions.

China's demographic and economic challenges are creating ripple effects globally. The country's declining population and uneven consumption recovery underline its structural vulnerabilities. At the same time, China's expansion of the Belt and Road Initiative and its strategic shift toward indigenous technology development underscore its efforts to bolster long-term resilience. However, the suspension of Brazilian soybean imports by Chinese authorities highlights the fragility of global agricultural supply chains and Brazil's over-reliance on Chinese demand.

Structural and fiscal weaknesses in advanced and emerging economies are intensifying. Italy's surging public debt remains a systemic risk for the eurozone, while the U.K.'s fiscal pressures reflect rising borrowing costs and weaker growth prospects. Argentina's negotiations with the IMF highlight its reliance on international financing amidst prolonged economic stagnation. Brazil's tightening monetary policy to address inflation underscores the policy dilemmas facing emerging markets as they navigate external and internal shocks.

Technological decoupling accelerates as global supply chains realign. Taiwanese firms relocating production from China to other regions, including the U.S. and Vietnam, reflect the broader trend of technological decoupling driven by geopolitical and economic factors. The European Union's tightening of digital regulations and China's counter-efforts to boost technological self-reliance underscore the growing fragmentation of global tech ecosystems.

Strategic adaptation is critical for navigating these intertwined challenges. Policymakers must prioritize securing critical supply chains, fostering energy security, and addressing structural imbalances. For investors, opportunities lie in sectors aligned with structural shifts, such as renewable energy, advanced technology, and critical minerals. Navigating this environment requires a forward-looking approach that balances short-term risks with long-term opportunities.

Geopolitical Risk Assessment for the Global Markets
(22-01-2025)

The global economy faces intensifying challenges from escalating trade tensions, energy market disruptions, and structural pressures in key economies. Short-term risks are marked by trade disputes, inflationary pressures, and energy volatility, while long-term challenges center on technological decoupling, demographic shifts, and the realignment of global alliances. Policymakers and investors must respond to an evolving multipolar world order characterized by protectionism and resource nationalism.

Geopolitical Risk Index

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

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