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Exclusive: Ian Bremmer’s Top Risks for 2025
Every January, Eurasia Group, our parent company, produces a report with its forecast for the Top 10 Risks for the world in the year ahead. Its authors are EG President Ian Bremmer and EG Chairman Cliff Kupchan.
Here are brief summaries of the most important risks that will preoccupy world leaders, business decision-makers, and the rest of us in 2025, according to Bremmer and Kupchan. You can read the full report here.
1. The G-Zero wins
A G-Zero world is an era when no one power or group of powers is both willing and able to drive a global agenda and maintain international order. We’ve been living with this lack of international leadership for nearly a decade now. But in 2025, the problem will get a lot worse.
Bremmer and Kupchan argue that we should expect new and expanding power vacuums, emboldened rogue actors, and a heightened risk of dangerous accidents, miscalculations, and conflict. The risk of a geopolitical crisis, they warn, “is higher than at any point in our lifetimes.”
Russia and China remain challengers to the Western-led security order, though in very different ways. Rising inequality, shifting demographics, and warp-speed technological change have persuaded a growing number of citizens in advanced industrial democracies that “globalism” hasn’t worked in their favor. And the world’s military superpower will again be led by the only post-World War II president who rejects the assumption that a US global leadership role serves the American people.
Bremmer and Kupchan detail three ways out of what they call a “geopolitical recession.” One, reform existing institutions like the UN, IMF, and others to operate more effectively and command broad legitimacy. Two, build replacement institutions that better reflect the underlying balance of power. Three, impose a new set of rules by force. Different actors are pursuing all three of these strategies. But in 2025, it’s the third option where challengers to the system are devoting their attention, time, and resources.
This Top Risk is not a single event, the authors suggest. It’s the cumulative impact of the intensifying G-Zero leadership deficit and the deepening geopolitical recession on the breakdown of the global order. The result is a uniquely dangerous period of world history on par with the 1930s or the early Cold War.
And just when we were celebrating the end of 2024.
2. Rule of Don
Donald Trump’s second term will not be like his first, Bremmer and Kupchan predict. Emboldened by the scale of his 2024 election victory and the support of a unified Republican Party, Trump will enter office more experienced and better organized than in 2017. He will populate his administration with loyalists who now have a better understanding of how the federal government works. His consolidated control over Republicans in Congress, a 6-3 conservative majority on the Supreme Court, and a friendlier media environment will help him advance his agenda.
From this solid foundation, Trump will work to purge the federal bureaucracy of professional civil servants and replace them with political loyalists, particularly at the Justice Department and the FBI. This consolidation of power will “stretch the norms of Washington to their breaking point,” according to Bremmer and Kupchan. The erosion of independent checks on executive power and an active undermining of the rule of law, they argue, will leave more of US policy dependent on the arbitrary decisions and personal whims of one powerful man in Washington rather than on established and politically impartial legal principles.
Democracy itself, the report cautions, will not be threatened. The US isn’t Hungary. But Trump’s indifference, in some cases hostility, to longstanding American values will set dangerous new precedents in “political vandalism” for future presidents of both parties.
3. US-China breakdown
The détente established by Joe Biden and Xi Jinping at Woodside in November 2023 kept US-China tensions reasonably contained in 2024. But Trump’s return to office will unleash an “unmanaged decoupling in the world’s most important geopolitical relationship.” That, in turn, risks a major economic disruption and a broader crisis.
Trump will set new tariffs on Chinese goods to pressure Beijing for concessions on a host of issues, and China’s leaders, despite real economic weakness at home, will respond more forcefully to prove to both Trump and China’s people that they can and will fight back.
Tensions over Taiwan will likely rise, though a true crisis remains unlikely in 2025. But Trump administration actions targeting the Chinese Communist Party's legitimacy and visas for Chinese students will further inflame tensions.
Technology policy will be the true frontline in this conflict, Bremmer and Kupchan assert. China’s leaders insist that Washington wants to stunt China’s technological growth to protect the US position as world No. 1. Battles over trade and investment in everything from semiconductors to critical minerals will erupt in 2025.
4. Trumponomics
In January, Trump will inherit a robust US economy. Output has risen above pre-pandemic trends, unemployment remains near 4%, and an inflation rate nearing the Federal Reserve’s 2% target encourages investors to expect interest rate cuts. But Bremmer and Kupchan warn that Trump’s policies will bring higher inflation and lower growth in 2025.
First, Trump will significantly hike tariffs to correct “unfair” practices and reduce America’s trade deficit, which he views as intrinsically bad for the country. When US consumers face fewer affordable options on many goods, inflation will rise again, leaving interest rates higher and slowing growth. The dollar will strengthen, the report forecasts, making US exports less competitive. Some countries targeted by Trump will retaliate with measures that hurt American exporters and raise the risk of a disruptive global trade war.
Second, there is Trump’s immigration policy, which could deport up to 1 million people in 2025, Bremmer and Kupchan argue, and as many as five million over the course of his four-year term. Reduced illegal immigration and mass deportations will shrink the US workforce, drive up wages and consumer prices, and reduce the productive capacity of the economy, they insist, and legal immigration won’t fill the gap.
5. Russia still rogue
Russia is now the world’s leading rogue power by a large margin, the report’s authors argue, and Vladimir Putin will pursue more policies that undermine the US-led global order, despite a likely ceasefire in Ukraine. Russia will take hostile action against EU countries with cyber, sabotage, and other “asymmetric attacks,” and will build on its strategic military partnership with Iran and North Korea in 2025.
Donald Trump will likely achieve the ceasefire in Ukraine he has promised, and Ukraine’s President Volodymyr Zelensky needs a halt to a war his country is slowly losing. Russia is advancing on the battlefield, but 600,000 Russian casualties and three years of sanctions give Putin good reason to cut a ceasefire deal with Trump. The agreement's terms, Bremmer and Kupchan predict, will freeze forces in place and leave Russia in de facto control of conquered territory. Both sides will rearm, and sporadic fighting will continue along the line of control, the report forecasts. The fragile ceasefire will probably continue through 2025, “but not much longer.”
Yet, the ceasefire itself will create new problems beyond Ukraine. The Nordics, the Baltic countries, and Poland will support a Ukrainian military buildup during the ceasefire. France, Germany, Italy, and others will likely provide security guarantees to Ukraine and bolster Ukrainian and EU defenses. EU sanctions on Russia will remain in place, giving Putin more reason to interfere in their domestic politics, just as they used cyber and other tools to interfere in Romania’s election in November 2024 and in the US too, according to US officials. Bremmer and Kupchan predict Putin will continue attempts at sabotage and even assassination in many Western countries, and continue to use Telegram to instill pro-Kremlin views in citizens of European countries.
NATO Secretary General Mark Rutte said in December that Moscow was “preparing for long-term confrontation, with Ukraine and with us.” Russia will do more than any other country to subvert the global order in 2025.
For the rest of the Top Risks 2025, read the full report here.
Disclaimer: Willis Sparks has contributed to these Top Risks reports for the past 20 years.
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A look back at the Top Risks of 2024
Every January, Eurasia Group, our parent company, produces a report with its forecast for the top 10 geopolitical risks for the world in the year ahead. Its authors are EG PresidentIan Bremmerand EG ChairmanCliff Kupchan. The 2025 report will drop on Jan. 6.
But first, let’s look back at the 2024 Top Risks report – you can read the full report here –to see where Bremmer and Kupchan hit or missed the mark.
1. The United States vs. itself
The argument: The US political system has become more dysfunctional than that of any other advanced industrial democracy. In 2024, the presidential election will deepen the country’s political divisions, testing American democracy to a degree the nation hasn’t experienced in 150 years and undermining US credibility internationally. With the election outcome close to a coin toss, the only certainty is damage to America’s social fabric, political institutions, and international standing.
The verdict: The election certainly further polarized the electorate, and President-elect Donald Trump survived two assassination attempts, the first by a frighteningly narrow margin. Fortunately, we’ll never know how chaotic and potentially violent the election season might have turned had Trump not turned his head at just the right moment during that rally in Pennsylvania. This risk might also have inflicted more damage had Trump not won by a clear enough margin that Democrats accepted the results.
2. Middle East on the brink
The argument: The fighting in Gaza will expand in 2024, with several pathways for escalation into a broader regional war. Some could draw the US and Iran more directly into the fighting. The conflict will pose risks to the global economy, widen geopolitical and political divisions, and stoke global extremism. No country involved in the Gaza conflict wants a regional conflict to erupt. But the powder is dry, and the number of players carrying matches makes the risk of escalation high.
The verdict: Here’s another risk that was dead-on but could have been much more destructive than it turned out to be.The war in Gaza expanded into the West Bank, Lebanon, and the shipping lanes of the Red Sea. Israel and Iran traded direct strikes, though Israel sustained little damage, and the US remained largely on the sidelines. Few predicted Israel would score such a decisive win over Hamas and Hezbollah in 2024, and no one foresaw the fall of Bashar Assad.
3. Partitioned Ukraine
The argument: Ukraine will be de facto partitioned this year, and Russia now has the battlefield initiative and a material advantage. 2024 is an inflection point in the war, and if Ukraine doesn't solve its manpower problems, increase weapons production, and set a realistic military strategy soon, its territorial losses could prove permanent and may well expand. Kyiv will take bigger military risks this year, including strikes on more targets inside Russia that provoke unprecedented Russian responses and could pull NATO into the conflict.
The verdict: Another strong call for Bremmer and Kupchan. The Russians still have the battlefield initiative, though it has come with an estimated 600,000 Russian casualties. And, as the report predicted, Ukraine also became more aggressive as the mood across the country soured. The report foresaw more Ukrainian strikes deeper into Russian territory, but it certainly didn’t predict a Ukrainian invasion of Russia’s Kursk region that continues to embarrass the Kremlin.
4. Ungoverned AI
The argument: Technology will outstrip AI governance in 2024 as regulatory efforts falter, tech companies remain largely unconstrained, and far more powerful AI models and tools spread beyond the control of governments.
The verdict: We did see AI distort politics in places like Romania, South Korea, and Pakistan this year, but these technologies remain in their infancy, and far greater disruptions are surely still ahead of us. The extraordinary influence on Donald Trump of Elon Musk, who owns his own AI company, makes that even more likely.
5. Axis of rogues (and America’s dangerous friends)
The argument: In 2024, Russia, North Korea, and Iran will boost one another’s capabilities and act in increasingly coordinated and disruptive ways on the global stage. Meanwhile, even Washington’s friends — the leaders of Ukraine, Israel, and (potentially) Taiwan — will pull the US into confrontations it wants to avoid.
The verdict: This was another solid prediction, though the report may have overestimated the impact of Iran, which now finds itself backed into a corner by Israel with its most important proxies – Hezbollah, Hamas, and Yemen’s Houthi rebels – reeling and Syria’s ousted president Bashar Assad now sharing a small one-bedroom apartment in Moscow with former Ukrainian President Viktor Yanukovych (kidding). The report underestimated North Korea’s willingness to support Russia, including by sending un-battle-tested NK troops to the Ukraine war’s front lines.
6. No China recovery
The argument: Absent an unlikely loosening of President Xi Jinping’s grip on power or a radical pivot toward large-scale consumer stimulus and structural reform, China’s economy will underperform throughout 2024. Beijing’s failure to reform the country’s sputtering economic growth model, the country’s financial fragilities, and a crisis of public confidence will expose gaps in the Chinese Communist Party’s leadership capabilities and increase the risk of social instability.
The verdict: As predicted, China’s stagnant economy had both political and economic impacts in 2024. Politically, it revealed once again that Xi is not Vladimir Putin, a leader who responds to his country’s weakness by becoming more belligerent. Instead, China mainly kept to pragmatically managed relations with the US this year and worked to solidify and extend relations with Europe, India, and others. Economically, China’s slow recovery kept global growth below hoped-for, post-COVID benchmarks. Given its importance for other risks, this one could have been #4 on the list rather than #6.
7. The fight for critical minerals
The argument: In 2024, governments around the world will intensify their use of industrial policies and trade restrictions that disrupt the flow of critical minerals, crucial components in virtually every sector that will drive growth, innovation, and national security in the 21st century, from clean energy to advanced computing, biotechnology, transportation, and defense.
The verdict: Politically motivatedrestrictions on trade in critical minerals among the US, China, and Europe were certainly on the rise in 2024, but this risk is much more likely to deserve mention in a Top 10 report over the next two to three years, particularly as Trump’s aggressive approach toward China removes some of the relationship’s guardrails.
8. No room for error
The argument: The global inflation shock that began in 2021 will continue to exert an economic and political drag in 2024. High interest rates caused by stubborn inflation will slow growth around the world, and governments will have little scope to stimulate growth or respond to shocks, heightening the risk of financial stress, social unrest, and political instability.
The verdict: Stubbornly high prices and slow growthcertainly played a featured role in anti-incumbentelection results in India, South Africa, France, the UK, Japan, and the US. Bremmer and Kupchan were wise to keep this risk low on this year’s list given that we didn’t see the developing world debt defaults — or the large-scale social unrest in multiple countries that would surely have followed.
9. El Nino is back
The argument: After a four-year absence, a powerful El Nino climate pattern will peak in the first half of this year, bringing extreme weather events that trigger food insecurity, increase water stress, disrupt logistics, spread disease, and foment migration and political instability.
The verdict: El Nino did help the planet set a heat record in 2024. It also triggered severe droughts, water shortages, and crop failures with predictable economic fallout. But the worst of the damage was limited to southern Africa, helping to avert much broader disruption in Asia and the Americas.
10. Risky business
The argument: Customers, employees, and investors — mostly on the progressive side — have brought the US culture wars to corporate offices, and now courts, state legislatures, governors, and activist groups — mostly conservative ones — will hit back. Companies caught in the political and legal crossfire will face higher uncertainty and costs.
The verdict: Given the Trump victory in the US, American companies generally fared poorly with diversity, equity, and inclusion initiatives; environmental, social, and governance standards; and other “woke” corporate messaging. But this risk could be even higher in 2025 as more companies find themselves caught between a Trump-inspired re-evaluation of the commercial impact of these campaigns and the inevitable anti-Trump backlash among his critics on the left. #FirstDoNoPolitics
Disclaimer: Willis Sparks has contributed to these Eurasia Group Top Risks reports for the past 20 years.
Watch our livestream: The Top Risks of 2025
WATCH: What's the world's #1 concern for the year ahead? Watch today's livestream with Ian Bremmer and global experts to discuss the Top Risks of 2025 report from Eurasia Group. The much-anticipated annual forecast of the ten biggest geopolitical risks to watch in 2025 has been released this morning. Evan Solomon, GZERO Media's publisher, will moderate the conversation with Ian Bremmer, president and founder of Eurasia Group and GZERO Media; Cliff Kupchan, Eurasia Group's chairman and a leader of the firm's global macro coverage; Susan Glasser, staff writer at the New Yorker;andJon Lieber, Eurasia Group's head of research and managing director, United States.
Watch live at https://www.gzeromedia.com/toprisks
The Top Risks of 2025 with Ian Bremmer & Eurasia Group
Monday, January 6, 2025 | 12:00 PM ET | https://www.gzeromedia.com/toprisks
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Defining Kamala Harris at DNC 2024
From Chicago's United Center on the final night of the Democratic National Convention, Jon Lieber, Eurasia Group's head of research and managing director for the firm's coverage of United States political and policy developments, recaps the key takeaways from the DNC.
We're here in Chicago wrapping up the Democratic National Convention for 2024. You can see the balloons are falling behind us, and the benediction is going on as folks are starting to file out of the convention hall into what I think are going to be long lines to get home.
So a couple of key themes that jumped out over the four days of the convention. One was, of course, to introduce and define Kamala Harris, and what they sort of did was embrace her record as a prosecutor, giving her this persona as a loving family member, but a tough, no-nonsense person that you don't want to mess with. And that was a theme that was repeated over and over again in testimonials from her family and friends, and also a message pretty directly given by her.
Second, of course, they wanted to create a contrast with Trump, and the way they did that was to attack his character over and over again, talking about how, “They wouldn't trust him to move their furniture,” a really great line by Senator Elizabeth Warren, and making a contrast about the schemes and frauds and criminal convictions that are in his background versus, again, Kamala Harris's record as a prosecutor, standing up for a little guy.
And then, of course, another big theme, especially one that came out on day four tonight, was to define the Democratic Party as the party of freedom and the future of the USA. A lot of flags waving in the audience. There was an extended section speaking about the military and military strength, right in prime time. Clearly, Democrats trying to set themselves out to be the party that can defend America.
I would say three groups were really targeted over the course of the convention. The first is union members. There was a lot of shout-outs to organized labor, who are, of course, a key Democratic constituent. Black voters who are going to be absolutely critical to Kamala Harris' ability to win, particularly if they want to compete in Georgia and North Carolina. And then, Republicans, gettable on the fence Republican-leaning independents who don't like Trump all that much and want to feel comfortable voting for Kamala Harris. Very clear themes directed to those three groups throughout the week.
Overall, probably a pretty successful convention. Certainly played well here in the convention hall, but of course, it's how it plays on TV and social media that really matters.
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Populism and partition? Europe's bleak forecast for the year ahead
GZERO’s Tony Maciulis joins Mujtaba Rahman, Eurasia Group's Managing Director for Europe, on the sidelines of the Munich Security Conference to discuss the pressing political and economic situation in Europe. Rahman looks ahead to the EU Parliament's upcoming elections, highlighting concerns over populist party performance. “[Populists] will certainly be better represented” Rahman tells Maciulis, “but that being said, the impacts on policy will be marginal at best.”
Rahman also delves into Europe’s economic challenges, citing bleak growth forecasts and Germany's fiscal constraints. “The overall picture is an economy really in the doldrums, not performing…basically flat." Discussing Ukraine, Rahman underscores the risk of partition and stresses the importance of Western integration for Ukraine's ultimate failure or success against Russia. Rahman also raises concerns over the potential impact of a Trump presidency on transatlantic relations. “Is Trump signaling an invitation to Russia and others to probe and to test? That's really where the concern lies."
Join Ian Bremmer and a panel of experts this Saturday, February 17, at 12 pm ET/9 am PT/6 pm CET for our Global Stage discussion at the Munich Security Conference: Protecting Elections in the Ageof AI.
Keep up with GZERO's Global Stage coverage of MSC 2024 for more.
Podcast: Trouble ahead: The top global risks of 2024
Listen: In a special edition of the GZERO podcast, we're diving into our expectations for the topsy-turvy year ahead. The war in Ukraine is heading into a stalemate and possible partition. Israel's invasion of Gaza has amplified region-wide tensions that threaten to spill over into an even wider, even more disastrous, even ghastlier conflict. And in the United States, the presidential election threatens to rip apart the feeble tendrils holding together American democracy.
All those trends and more topped Eurasia Group's annual Top Risks project for 2024, which takes the view from 30,000 feet to summarize the most dangerous and looming unknowns in the coming year. Everything from out-of-control AI to China's slow-rolling economy made this year's list.
GZERO Publisher Evan Solomon sat down with Eurasia Group Founder and President Ian Bremmer and Chairman Cliff Kupchan to work through their list of Top Risks for 2024 alongside Susan Glasser, staff writer at The New Yorker and co-author of "The Divider: Trump in the White House, 2017-2021"; Zeid Ra'ad Al Hussein, CEO & President of the International Peace Institute and former United Nations High Commissioner for Human Rights; and Marietje Schaake, International Policy Fellow, Stanford Human-Centered Artificial Intelligence. The big throughline this year? Events spiral out of control even against the wishes of major players. Whether it's possible escalation between Israel and Iranian proxies, Chinese retaliation to the result of the Taiwanese election, or central banks finding themselves squeezed into a corner by persistent inflation, the sheer number of moving parts presents a risk in and of itself.
Take a deep dive with the panel in our full discussion, recorded live on January 8.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.
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A world of conflict: The top risks of 2024
2024 is shaping up to be a turbulent year. The war in Ukraine is heading into a stalemate that puts the country on the road to partition. Israel's invasion of Gaza risks expanding to a region-wide war. And in the United States, the presidential election is pitting a divided country against itself with unprecedented risks for its democracy. Throw in AI growing faster than governments can keep up, China's rumbly grumbly economy, and El Nino weather, and you're starting to get the picture.
All those trends and more made it onto Eurasia Group's annual Top Risk project for 2024. As a political risk consultancy, Eurasia Group strives to keep clients informed of the global affairs that will impact their interests and bottom lines. The Top Risks project takes the view from 30,000 feet every year, summarizing the biggest and most dangerous unknowns that will affect everyone, political junkie or not.
GZERO Publisher Evan Solomon sat down with Eurasia Group Founder and President Ian Bremmer and Chairman Cliff Kupchan to work through their list of Top Risks for 2024 alongside Susan Glasser, staff writer at The New Yorker and co-author of "The Divider: Trump in the White House, 2017-2021"; Zeid Ra'ad Al Hussein, CEO & President of the International Peace Institute and former United Nations High Commissioner for Human Rights; and Marietje Schaake, International Policy Fellow, Stanford Human-Centered Artificial Intelligence. The big throughline this year? Events spiral out of control even against the wishes of major players. Whether it's possible escalation between Israel and Iranian proxies, Chinese retaliation to the result of the Taiwanese election, or central banks finding themselves squeezed into a corner by persistent inflation, the sheer number of moving parts presents a risk in and of itself.
Take a deep dive with the panel in our full discussion, livestreamed on Jan. 8.
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Hold us accountable: Our biggest calls for 2023
Every year, Eurasia Group releases its Top 10 geopolitical risks for the year ahead. You’ll see the 2024 edition next Monday. But an honest analyst looks back at past forecasts to see (and acknowledge) what he got right and wrong, and I’m going to do that here and now.
Here’s the 2023 full report. To remind you, our Top 10 risks for 2023 were:
- Rogue Russia
- Maximum Xi
- Weapons of Mass Disruption
- Inflation shockwaves
- Iran in a corner
- Energy crunch
- Arrested global development
- Divided States of America
- TikTok boom
- Water stress
Let’s take these one at a time …
1. Rogue Russia
Our top risk last year was that the war between Russia and Ukraine would be no closer to resolution and that Russia would be on track to become the world’s most dangerous rogue state.
Check and check.
Another year of brutal fighting brought hundreds of thousands of casualties – and barely budged the war’s frontlines. Russia, still led by a president considered a war criminal in the West, now faces even more sanctions, and it has therefore drawn closer to Iran and North Korea to procure much-needed military supplies from both.
Russia has also picked up the pace of cyberattacks on Ukrainian targets and continues to target cities across the country with airstrikes. Putin has kept Russia’s asymmetrical attacks incremental to avoid escalation and exacerbating divisions in the West, but Russian disinformation attacks are picking up in support of Kremlin-friendly politicians and political parties inside NATO countries.
For 2024, Putin will have new options. More on that next week.
2. Maximum Xi
This call fared well too. We expected Xi Jinping’s consolidation of political power to create big economic and policy challenges through increasingly arbitrary and capricious central decision-making. We saw that most dramatically early in 2023 when a sudden U-turn from the world’s tightest zero-COVID policies produced a bad hangover for the Chinese economy.
Making matters worse, the expected economic bounce-back hasn’t materialized, and the unpredictability of government decision-making led to growing capital flight and a sharp turnaround in foreign direct investment, weakening the economy further.
In fairness, Xi Jinping responded to the economic weakness later in the year with a friendlier and more open foreign policy than we feared. Relations with the United States and Europe have been far better managed in recent months.
Do we expect that trend to last in 2024? We’ll tell you much more about that next week too.
3. Weapons of Mass Disruption
Here’s where I think we were furthest ahead of the curve. A year ago, very, very few political leaders were actively thinking about the disruptive power of artificial intelligence. Now, the hopes and fears are front and center in every region of the world – but especially for decision-makers in America, China, and Europe. The UN is on the case now too.
We learned this year that new AI tools represent a unique technological breakthrough with implications for every sector of the economy. They’re already driving a new phase of globalization. But they’re also creating serious risks because AI will enable disinformation on a massive scale, fuel public mistrust in governing institutions, and empower demagogues and autocrats in both politics and the private sector. More on that next week too.
4. Inflation shockwaves
Here our forecast mainly missed the mark. We expected that inflation at levels not seen in generations would lead to a restrictive policy stance by major central banks, reducing global demand and causing financial stress and social and political instability. We were thinking mainly of countries already under pressure, but we considered the United States vulnerable too.
The US did experience a banking crisis of confidence following the collapse of Silicon Valley Bank and First Republic in 2023, but stronger-than-expected growth and continued low unemployment helped contain the fallout.
The global impact was less than we expected. Yes, China underperformed, but Europe absorbed the shocks created by the transition away from imports of Russian energy, and overall US performance stuck close to the “Goldilocks” scenario of slow economic cooling while avoiding recession. The risk of a major financial crisis was avoided.
With hindsight, inflation deserved to be on the list, but not at #4.
5. Iran in a corner
This one cut both ways in 2023. On the one hand, as we expected, there was no breakthrough with the Biden administration to restore the Iran nuclear deal, and that led Tehran to step up uranium enrichment and stockpiling. It also upped its military cooperation with the Kremlin, particularly with drone transfers that boosted Russia on the battlefield in Ukraine.
We also finished the year with serious concerns about an expansion of the regional war between Israel and Hamas, a conflict in which Iran would be a key player. Their various proxies in the region were already stepping up attacks on Israel and US forces in the region as 2023 came to an end.
But the positive surprise was a breakthrough we didn’t foresee — brokered by China — between Iran and Saudi Arabia. That diplomatic opening has facilitated better economic relations, and following the outbreak of war, leaders of the two countries have been in regular communication, helping to stabilize the region for now.
6. Energy crunch
This was the biggest miss in our 2023 top risks report. We forecast that supply-limiting geopolitical challenges coupled with higher global energy demand would push oil prices beyond $100 a barrel by the end of the year. But there was no energy crunch in 2023 because the wars and the best efforts of OPEC+ to bolster prices couldn’t outweigh reduced demand from sluggish economic growth in China or a dramatic expansion of US oil production despite its commitment to a faster and more expansive energy transition. Oil topped out just under $95 and quickly backed down. Despite the entirely unexpected risks in the Middle East, the price has lately bounced between $75-$80 per barrel.
7. Arrested global development
Though the pandemic is over, human development indicators overall continue to suffer, thanks to the Russia-Ukraine war, global inflation, climate change, the Israel-Hamas war, and a number of other military coups and conflicts in places like Haiti, Sudan, Ethiopia, and Armenia-Azerbaijan that receive very little attention from Western media.
The result is lower levels of economic and political security for most of the world’s population. This should have come higher on our list.
8. Divided States of America
Given the structural political dysfunction (ask former House Speaker Kevin McCarthy and the parade of his hapless would-be replacements) and the continued erosion of public confidence in US political institutions, this deserved to be on the list. Given the trajectory, we should have had it a little higher.
The 2024 election season is now in full swing, and in many ways, it is more problematic than in 2020. The international impact has so far been limited, and other governments are only just starting to grapple with the post-November uncertainties in US policymaking. More on that next week.
9. TikTok boom
Gen Z certainly became a bigger player in 2023, and not just on climate or issues of equality and identity politics. The Israel-Hamas war has created early challenges for the Biden reelection campaign, with both support for Palestinians and anger at the Israeli government becoming more intense as 2024 begins.
10. Water Stress
Water stress became more of an issue in 2023. Record rains made a big positive difference in the United States, facilitating a political deal for water-sharing in western US states and giving farmers a medium-term lease on life.
But other water-stressed parts of the world have experienced more pain. Northern Mexico remains in serious trouble. Agriculture and overall fiscal strain across Europe will require new political thinking. Sub-Saharan Africa now faces more starvation, especially in the Sahel and the Horn of Africa, adding to forced migration trends. Too many governments are focused only on crises, leaving longer-term plans for new institutions capable of marshaling long-term resources on the drawing board.
So, that’s my look back at 2023. Beginning next Monday, you’ll be reading much more about our expectations for a historically turbulent 2024.