- The world has entered a “geopolitical recession” due to changes in global power dynamics.
- The US-China rift is impacting trade more than any other time in history, experts said on a Goldman Sachs podcast.
- “Every single business in every single geography finds itself caught in the crossfire of geopolitics – that’s new.”
The geopolitical pot is boiling with US-China tensions, Russia-Ukraine war and escalating conflict in the Middle East.Thank you for reading this post, don't forget to subscribe!
Experts on the Goldman Sachs Podcast said the increase in geopolitical turmoil is becoming a concern for the market and the economy.
According to one political scientist, rising levels of conflict have pushed the world into a “geopolitical recession” as global leadership changes and power dynamics become distorted.
“I consider this a geopolitical recession,” Eurasia Group’s Ian Bremmer said on the Goldman Sachs “Exchange” podcast. “The institutions that we have globally, [which are] Its purpose is to create a level of governance that will no longer align with the world’s underlying balance of power.”
The geopolitical slowdown is due to the rising power of China and the Global South, while Japan and Europe are in decline. And as that political drama plays out, it’s impacting economies.
“Every single business in every geography finds themselves caught in the crossfire of geopolitics – that’s new,” Jared Cohen, president of global affairs at Goldman Sachs, said in the episode. “Unless you’re in the energy sector or the tech sector, you were largely immune to those geopolitical dynamics.”
Cohen pointed out that in the era of hyper-globalization controlling the global economy, the “geopolitical center of gravity” was largely in the Middle East. But after Covid-19, the center of that tension shifted towards the Washington-Beijing rift.
Furthermore, uncertainty at the global level is also being heightened by the fact that the most predictable state actors have gone “off script”, creating a lack of credibility.
Cohen said, “We used to be able to trust the US and China that economic interests influence geopolitical outcomes. Now that’s reversed.” “Domestic conditions in both countries are driving geopolitical aspirations which in turn are influencing medium and long-term economic conditions.”
This has brought new instability to geopolitics that has impacted businesses more than any other time in history.
Geopolitical challenges are roiling markets, with the latest developments in the Middle East sending oil prices sharply higher on Friday, and the Red Sea attacks threatening to reignite global inflation as shipping costs soar. Is.