Eurasia Group | Top Risks for 2020

Top Risks 2020: Coronavirus Edition

Eurasia Group's Top risks For 2020The time has come to update our Top Risks 2020, taking into account how the coronavirus has accelerated the trends that worry us most.

This year's report was originally published on 6 January 2020 and updated on 19 March 2020.


IntroductionIn January, we wrote that this year was a tipping point, with a historic shift in globalization; a weakened US leadership; the rise of populism within the world's democracies; the rise of an alternative Chinese economic, political and technological model; and the decline of an aggrieved and interventionist Russia pushing the world into a geopolitical recession. We now face the first global crisis of our geopolitical recession … a coronavirus pandemic. The timing isn't good.

Top Risks for 2020: Coronavirus Edition, cycles driving the world

We warned in January that globalization was under siege; we were more right about that than we would like to be. Travel to the US from Europe and China, and travel to Europe from just about anywhere, has now been halted. The coronavirus outbreak has dealt a body blow to the global flow of goods and services, accelerating the process we wrote about. The public health emergency has also deepened the geopolitical recession, as the US shows little interest in quarterbacking an international response, and China aims to take advantage of the vacuum. More broadly, the pandemic has forced all nations to look inward, speeding both this recession and the process of deglobalization.

Top Risks for 2020: Coronavirus Edition, Summary of Key Takeaways
 

Top Risks 2020 #1: Rigged!: Who governs the US?

1. RIGGED!: WHO GOVERNS THE US?

We've never listed US domestic politics as our Top Risk, but in 2020, US institutions will be tested in unprecedented ways.

Top Risks 2020 #2: The Great Decoupling

2. THE GREAT DECOUPLING

The decision by China and the US to decouple in the technology sphere is the single most impactful geopolitical development for globalization since the Soviet Union collapsed.

Top Risks 2020 #3: US/China

3. US/CHINA

Divergences between the US and China's political structures are bringing irreconcilable differences to the fore, and tensions will lead to a more explicit clash over national security, influence, and values.

Top Risks 2020 #4: MNCs not to the rescue

4. MNCs NOT TO THE RESCUE

Nation-states are reasserting themselves, presenting corporates with a significantly more confrontational regulatory and geopolitical environment going forward.

Top Risks 2020 #5: India gets Modi-fied

5. INDIA GETS MODI-FIED

Prime Minister Narendra Modi has spent much of his second term promoting controversial social policies at the expense of an economic agenda. The impacts will be felt in 2020.

Top Risks 2020 #6: Geopolitical Europe

6. GEOPOLITICAL EUROPE

For years, Europe has proven unable or unwilling to effectively push back where it disagreed with Washington or, increasingly, Beijing. This is about to change.

Top Risks 2020 #7: Politics vs. economics of climate change

7. POLITICS VS. ECONOMICS OF CLIMATE CHANGE

Climate change will create a collision course for corporate decision-makers, who must choose between commitments to reduce emissions and bottom lines.

Top Risks 2020 #8: Shia crescendo

8. Shia crescendo

US policy toward the major Shia-led nations in the Middle East is failing. That creates significant risks for regional stability.

Top Risks 2020 #9: Discontent in Latin America

9. DISCONTENT IN LATIN AMERICA

Public anger over sluggish growth, corruption, and low-quality public services will keep the risk of political instability high across Latin America in 2020.

Top Risks 2020 #10: Turkey

10. TURKEY

President Recep Tayyip Erdogan has entered a period of steep political decline. With a long history of provocative behavior in response to threats, his weakness will lead him to lash out.

Top Risks 2020 Red Herrings

RED HERRINGS

The new “axis of evil" is unlikely to blow up, despite the headlines. The world's advanced industrial democracies remain well-positioned to withstand the populist storm in 2020. A big win for Boris Johnson gives Britain a much-needed break from Brexit madness.


conclusion

It's important to recognize the unprecedented nature of this environment in the context of our experience over recent decades. In the coming weeks the world will get a much better handle on the epidemiology of the coronavirus pandemic, but the fractiousness and weakness of the geopolitical order—in terms of the legitimacy of domestic politics, the weakness of existing international alliances, and the lack of alignment of institutional frameworks and today's global balance of power—reflect a radically different backdrop for a global crisis than any we've experienced in recent decades. Looking forward, it also implies a different trajectory for the world order as we know it, when we eventually come out the other side.

Yours through the looking glass,

—Ian & Cliff

 
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