Global Risk Indexes (27-01-2025)

Trade Wars, Energy Dynamics, and Tech Rivalries Drive a Volatile Global Economy

Global trade dynamics are increasingly fraught as protectionism escalates. U.S. President Donald Trump's threats of tariffs against Colombia, Canada, and Mexico highlight the continued use of trade policy as a geopolitical tool. While Colombia's concession to accept deported migrants has temporarily de-escalated tensions, the broader implications for Latin American economies reliant on U.S. trade remain concerning. The Mexican peso and Canadian dollar have already depreciated, reflecting market fears over supply chain disruptions and inflationary spillovers.

Energy markets remain a battleground for geopolitical and economic influence. Trump's call for OPEC to lower oil prices to counter Russian revenues adds another layer of complexity to global energy diplomacy. While Brent crude and WTI prices have dipped, underlying market volatility persists due to ongoing disruptions in the Red Sea and mixed signals from OPEC. Saudi Arabia's proposed price hikes for Asian buyers and a $1 trillion investment pledge to deepen U.S. ties underscore the kingdom's efforts to consolidate its regional and global energy dominance. However, these moves risk alienating key Asian customers, such as China and India, who are increasingly diversifying their energy imports.

China's strategic shifts underscore resilience but also systemic vulnerabilities. The appointment of Shenzhen Metro executives to leadership positions at property giant China Vanke signals increased state intervention to stabilize China's struggling real estate sector. This follows broader efforts to diversify trade partnerships, including the suspension of Brazilian soybean imports. While Lunar New Year consumption has provided a temporary economic boost, long-term demographic and structural challenges persist, undermining Beijing's efforts to sustain growth and global influence.

Technological competition accelerates as China challenges U.S. tech dominance. The launch of DeepSeek's AI model has sparked investor concerns about the future of U.S. technological leadership. DeepSeek's rapid rise reflects China's ability to leverage domestic innovation to counter U.S. sanctions and export controls. This development has rattled global tech markets, with major companies like Nvidia and SoftBank experiencing sharp declines. The broader implications for supply chain realignment and industrial competitiveness are significant, as technological decoupling reshapes global innovation ecosystems.

Emerging markets face renewed pressures from capital flight and fiscal challenges. Higher U.S. interest rates and the unpredictability of Trump's trade policies are driving investors toward safer assets, leaving emerging economies exposed to liquidity risks. While frontier markets such as Serbia and Zambia are attracting interest due to their relative insulation from U.S. tariffs, larger emerging markets like Brazil and South Africa are grappling with inflationary pressures and fiscal imbalances. Turkey remains a bright spot, benefiting from policy normalization and reconstruction opportunities in Syria and Ukraine.

Strategic adaptation is essential in this volatile environment. Policymakers must prioritize securing critical supply chains, fostering energy diversification, and supporting technological innovation to mitigate systemic risks. For investors, opportunities lie in renewable energy, advanced technology, and critical minerals, which align with the structural shifts reshaping the global economy. A forward-looking, collaborative approach will be critical to navigating these multipolar dynamics.

Geopolitical Risk Assessment for the Global Markets
(27-01-2025)

The global economic order is being reshaped by intensifying trade disputes, energy realignments, and the acceleration of technological competition. Short-term risks center on inflationary pressures, market volatility, and supply chain disruptions. Long-term risks involve demographic constraints, resource nationalism, and the fragmentation of global alliances. Policymakers and investors must respond to these challenges by developing adaptive strategies to stabilize trade, secure energy resources, and leverage technological innovation.

Geopolitical Risk Index

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

Previous Briefings

• Trade Wars, Energy Dynamics, and Tech Rivalries Drive a Volatile Global Economy - (27-01-2025)
• Global Trade Wars, Energy Volatility, and Technological Decoupling Shape a Fragmented Economic Order - (26-01-2025)
• Trade Wars, Energy Alliances, and Capital Flight Define a Multipolar Economic Crisis - (25-01-2025)
• Trade Wars, Energy Market Instability, and Economic Fragmentation Challenge Global Stability - (24-01-2025)
• Escalating Trade Wars, Energy Volatility, and Strategic Alliances Shape a Fractured Global Economy - (23-01-2025)
• Global Economy Faces Trade Escalations, Energy Volatility, and Shifting Alliances in a Multipolar World - (22-01-2025)
• Global Markets Face Volatility as Trade Wars and Energy Tensions Escalate in a Fragmented World Order - (21-01-2025)
• Trade Wars, Energy Struggles, and Structural Crises Define a Volatile Global Landscape - (20-01-2025)

See all previous briefings