Global Risk Indexes (28-01-2025)

Trade Wars, Energy Volatility, and Technological Shifts Reshape the Global Economic Landscape

U.S. trade policies continue to sow uncertainty across global markets. President Donald Trump's escalating tariff threats against Colombia, Mexico, and Canada underscore the administration's use of trade as a tool for geopolitical leverage. While Colombia narrowly avoided tariffs by accepting deported migrants, the Mexican peso and Canadian dollar remain under pressure as February 1 deadlines loom. These developments highlight the fragility of regional trade relationships under the renewed protectionist agenda.

Energy markets remain a focal point of geopolitical and economic realignment. Trump's public calls for OPEC to lower oil prices, coupled with the ongoing sanctions targeting Russian crude, have added volatility to global energy markets. Brent and WTI prices remain subdued despite these pressures, as weak economic data from China dampens demand expectations. Meanwhile, Saudi Arabia's strategic outreach, including a $1 trillion investment pledge to the U.S. and regional diplomacy with Iraq and Libya, reflects efforts to maintain its influence amid shifting energy dynamics.

Technological competition accelerates as China disrupts global innovation ecosystems. The emergence of DeepSeek's AI model has sent shockwaves through global technology markets, with U.S. tech leaders like Nvidia and Microsoft suffering significant valuation losses. DeepSeek's cost-efficient model challenges long-held assumptions about U.S. dominance in AI and underscores the growing competitiveness of Chinese innovation. This development exemplifies the risks of technological decoupling and its implications for industrial supply chains and global competitiveness.

Emerging markets face heightened vulnerabilities from capital flight and trade uncertainties. Brazil's economic stability is precarious, with high-interest rates and currency depreciation compounding fiscal pressures. While Brazil has avoided direct U.S. tariffs due to its balanced trade relationship, it remains vulnerable to global trade disruptions. Similarly, South Africa and Turkey face mounting pressures as capital flows shift toward safer assets amid higher U.S. interest rates and geopolitical volatility.

Europe navigates mixed signals amidst internal and external pressures. The European Union's renewal of sanctions against Russia underscores its commitment to maintaining pressure on Moscow, despite internal divisions highlighted by Hungary's hesitance. The bloc also faces economic challenges from Trump's protectionist rhetoric, with key sectors like autos and pharmaceuticals at risk of new tariffs. Meanwhile, the region's subdued energy demand and weak consumer confidence further complicate its economic recovery prospects.

Strategic priorities for navigating this complex landscape are clear. Policymakers must focus on trade diversification, energy security, and fostering innovation ecosystems resilient to geopolitical shocks. For investors, opportunities lie in sectors aligned with long-term structural trends, including renewable energy, critical technologies, and resilient infrastructure. Enhanced coordination and proactive policy adjustments will be vital in addressing the systemic risks and uncertainties of this multipolar world order.

Geopolitical Risk Assessment for the Global Markets
(28-01-2025)

The global economic and geopolitical landscape is marked by escalating trade tensions, volatile energy markets, and technological upheaval. Short-term risks include market volatility driven by protectionist policies, energy price fluctuations, and the repercussions of technological decoupling. Long-term risks center on systemic shifts in trade alliances, resource dependencies, and innovation ecosystems. Policymakers and investors must navigate these complexities with adaptive strategies and enhanced resilience to secure stability and growth.

Geopolitical Risk Index

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

Previous Briefings

• Trade Wars, Energy Volatility, and Technological Shifts Reshape the Global Economic Landscape - (28-01-2025)
• 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)

See all previous briefings