The world is in a ‘geopolitical recession’. Here’s what that means for businesses.
Jan. 12 – BusinessInsider
- The US-China rift is impacting business more than at any other time in history, experts said on Goldman Sachs podcast.
- The world has entered a “geopolitical recession” as global power dynamics shift.
- “Every single business in every single geography finds themselves c----t in the crossfire of geopolitics — that’s new.”
- The geopolitical pot is bubbling with US-China tensions, a Russia-U-----e war, and intensifying conflict in the Middle East.
- The rise in geopolitical tumult is increasingly a concern for markets and the economy, experts said on a Goldman Sachs podcast.
According to one political scientist, the rising level of conflict has tipped the world into a “geopolitical recession” as global leadership shifts and power dynamics become warped.
“It’s what I consider a geopolitical recession,” Ian Bremmer from Eurasia Group said in a Goldman Sachs “Exchanges” podcast. “The institutions that we have globally, [which are] meant to create a level of governance, no longer align with the underlying balance of power of the world.”
Driving the geopolitical downturn is the rising power of China and the Global South, while Japan and Europe slip into a decline. And as that political drama unfurls, it’s rippling across economies.
“Every single business in every single geography finds themselves c----t in the crossfire of geopolitics — that’s new,” Jared Cohen, Goldman Sachs’ president of global affairs, said in the episode. “Unless you’re in the energy sector or tech sector, you were largely immune from those geopolitical dynamics.”
Cohen explained that in the era of hyper-globalization that governed the global economy, the “geopolitical center of gravity” was largely in the Middle East. But after C---D-19, the locus of that tension migrated to the Washington-Beijing rift.
Also adding to the uncertainty on a global scale is that the most predictable state actors have gone “off script,” which has created a deficit of credibility.
“We used to be able to count on the US and China having the economic interests drive the geopolitical outcomes. Now it’s reversed,” Cohen said. “Domestic circumstances in both countries are driving geopolitical aspirations that are in turn impacting medium and long term economic situations.”
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That’s infused new volatility into geopolitics which has hit businesses more than any other time in history.
Geopolitical challenges continue to shake markets, with the latest developments in the Middle East giving oil prices a sharp boost on Friday, and the Red Sea attacks risk re-triggering a spell of global inflation as shipping costs are soar.
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