The Eurasia Group has outlined their opposition to optimism, where they see the chance for political weakness that could hit global markets.
Many of the threats come from the fallout of the financial crisis. The unity shown then has now evaporated, as country's pursue their own policies causing problems in far corners of the world.
Others are legacy concerns, such as the change of power in North Korea.
These may be worth noting, particularly if you are an emerging markets investor.
World's leaders ignore the each other and only pay attention to domestic politics
G-20 cooperation has begun to fall apart in the wake of the financial crisis. The world's top economies are now diametrically opposed on economic policy decisions, and major meetings seem to be now about grandstanding, not about finding solutions.
In what the Eurasia Group calls the G-Zero, all countries will focus on themselves, rather than each other.
Eurozone crisis widens, engulfs Spain and Italy, and endangers the region
The eurozone will continue to be in crisis this year, as its most powerful countries (Germany, etc.) are unwilling to sort out long-term solutions to the region's problems. The result is the PIIGS will struggle domestically, as more austerity measures are undertaken, and the IMF gets more involved.
But the big problem that could show up is rising rates for Spain and Italy, which will make their debt positions even worse.
Cyber attacks continue to spread from business to state
Governments will come under increasing threat from governments in the realm of cyber attacks. Moves like Stuxnet will increase, and be more common than traditional warfare.
These conflicts will also appear between corporations, state sponsored and otherwise, as well as through an increase in government transparency, through organizations like WikiLeaks
Global jealousy over Chinese growth confronts a regime unwilling to budge
The world will turn against China and its export led growth model, while also grappling with its military growth in Asia. But Chinese leaders will be unable to respond and instead will follow their own course.
Korean Peninsula becomes increasingly unstable, China and the U.S. fail to communicate
North Korea will continue to deal with the change in power within the country, and that, combined with a hawkish South Korea, will make the peninsula dangerous.
As the relationship between China and the U.S. breaks down, the region becomes even more dangerous, as the two fail to work together for solutions.
North Korea will continue to deal with the change in power within the country, and that, combined with a hawkish South Korea, will make the peninsula dangerous.
As the relationship between China and the U.S. breaks down, the region becomes even more dangerous, as the two fail to work together for solutions.
Capital controls spread throughout the emerging world creating new imbalances
Capital controls continue to rise in the emerging world, as hot money continues to flow from the developed markets.
The risk is that as some markets make the move, other countries will be forced to.
Political gridlock crushes Washington's ability to deal with key issues (like housing reform)
divided Congress fails to come to key decisions on issues like reforming the housing market and Fannie and Freddie. Parties continue to fight for legislation that won't get passed and President Obama starts to utilize his executive power, independent of Congressional support
Chaos in Pakistan brings the government's control of the country into doubt
Instability in Pakistan continues, with several regions of the country spinning out of government control. The military becomes increasingly powerful, but a 1999 style coup looks unlikely.
The U.S. fails to get the help it needs from Pakistan in Afghanistan.
Violence rises in Mexico and the world loses faith in its stability
Violence in Mexico expands to assassinations of top business people and government authorities.
The potential is for this sort of violent chaos to cripple investor chaos, hurting the Mexican economy.
Several emerging markets disappoint, driving down investor confidence
5 countries, once loved by emerging market investors, start to show signs of deterioration:
Argentina - Rising inflation, more populism
Hungary - Battle with IMF
South Africa - Government looks increasingly one-party, not pro-business
Sri Lanka - Stability not hear to stay, government not dealing with problems
Thailand - Continued protest and potential violence from supporters of former PM Thaksin Sinawatra
0 comments:
Post a Comment