Uncertainty will shape the global landscape in 2023

Uncertainty will shape the global landscape in 2023
Uncertainty will shape the global landscape in 2023
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As the end of the first quarter of the 21st century approaches, the global landscape remains more volatile and uncertain than at any time in recent history, and 2023 is expected to be one of the most challenging years in decades, with market turmoil continuing. Although inflation can be controlled, it will remain exceptionally high, with an inevitable global recession, and the main questions are: How far will the recession be? And how severe is it?

an actual recession

Arguably, the UK is already in a recession. For the United States, the recession is likely to be shorter and less severe than in Europe, whose geographic proximity and traditional energy dependence directly affect the outcome of the conflict in Ukraine. Once China learns to live with “Covid-19”, in 2023, its economy will recover. However, the question remains: When and how will you deal with the virus? Moreover, post-pandemic recovery in Chinese demand may lead to higher inflation in Western economies.

Mounting debt in emerging markets has become increasingly unsustainable. This year, there may be sovereign debt defaults, particularly in Africa, unless coordinated and effective restructuring efforts are launched. Just before the end of 2022, Ghana reached a last-minute bailout deal with the International Monetary Fund, and it is likely that others will follow suit in 2023. Moreover, investors should prepare for the possibility of their earnings falling.

In the geopolitical realm, the unfortunate truth is that the worst is yet to come in Ukraine. In particular, Russia is preparing to launch a major offensive in the first half of 2023, having recruited more than 200,000 new troops, in the months leading up to the end of 2022. There is no ceasefire in sight for the foreseeable future, as there is no confidence or An incentive to conduct serious negotiations at this time.

For Russian President Vladimir Putin, the conflict is an existential crisis, and he is committed to providing his forces with everything they need to achieve victory in Ukraine. Moreover, Putin feels that time is on his side, and he can prolong the war indefinitely. And he seeks to exhaust Western political solidarity, and public patience over time through fatigue in Ukraine. However, the morale of Russian forces, and access to resources, pose serious challenges to Putin in his quest for victory, which is still not clearly defined.

The main financier

On his recent visit to Washington, Ukrainian President Volodymyr Zelensky got much of what he sought for 2023, including the advanced Patriot missile defense system. As Ukraine’s main military financier, the United States will have committed nearly $100 billion during the first year of the conflict. However, the leaders of the newly inaugurated House of Representatives, which is controlled by Republicans, have made clear that there are no “blank checks” for Ukraine. Although US funding will not stop in 2023, it is likely to slow and be subject to more scrutiny before disbursement.

In 2023, tensions between the United States and China will remain dangerously high on several fronts, particularly around Taiwan and the South China Sea, largely including maritime claims and territorial disputes. Despite both sides’ desire to avoid direct confrontation, an ongoing game of brinksmanship can lead to a mishap with unintended consequences.

The recent collision between American and Chinese aircraft in the South China Sea could have sparked an armed conflict and changed the course of history. This incident, and similar previous events, underscore the indispensable need for a more effective hotline of communication between the United States and China, similar to what the United States and the Soviet Union had during the Cold War.

pressure on Taiwan

The constant threat of a Chinese invasion of Taiwan in 2023 is unlikely to materialize. At present, China lacks the capacity for an effective invasion, and in addition, the economic consequences for China and the world would be disastrous. The failed Russian attack on Ukraine offers valuable lessons. After all, the West may not be as divided or in rapid decline as Chinese leaders once believed.

Chinese President Xi Jinping is likely to besiege, but not invade, Taiwan if he feels increasingly challenged by the United States, or if the political shift toward Taiwanese independence takes an irreversible course. Additional visits by US political leaders to Taiwan, such as the August 2022 trip of former House Speaker Nancy Pelosi, could provide China with an excuse to impose a blockade and change the lines of pressure on Taiwan in its favour.

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trouble spots

Taiwan’s presidential elections, in 2024, could represent a potential crisis if calls for independence escalate. Essentially, the leaders of the United States and China need to engage more regularly and manage the relationship more effectively. Failure to do so will have disastrous consequences globally.

2022 was the year that COVID-19 was largely brought under control. And in 2023, China risks stalling this progress, due to the lack of transparency about the rapid spread of the epidemic, resulting from the abrupt termination of its disastrous “zero infections” policy. The threat of an emerging vaccine-resistant variant remains real.

In an attempt to save face and maintain power, the Communist Party leadership is displaying the same irresponsible behavior it was during the initial outbreak of the virus in early 2020. It is already losing massive credibility at home, with its failure to control the epidemic and the accompanying narrative.

On the geopolitical front, other dangerous flashpoints that continue to threaten global stability in 2023 include constant volatility and dangerous brinkmanship with Iran. Moreover, India’s fragile borders with Pakistan and China – the three nuclear-armed countries – remain perpetual hotspots, where joint skirmishes could lead to dangerous armed conflict at any moment.

The year 2023 will also see the growing influence of middle powers shaping geopolitics at the regional level, with regular global ramifications. In particular, Saudi Arabia and its ability to set international energy prices, and Turkey’s ability to influence the Ukraine war.

• The year 2023 will see the growing influence of middle powers shaping geopolitics at the regional level with systematic global repercussions.

• $100 billion allocated by the United States to Ukraine during the first year of the conflict.

• During this year, there may be sovereign debt defaults, particularly in Africa, unless coordinated and effective restructuring efforts are launched.

• The recent collision between American and Chinese aircraft in the South China Sea could have sparked an armed conflict and changed the course of history.

Marco Vicenzino.. a strategic consultant focusing on geopolitical analysis and international business development

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