Looking for opportunity in a geopolitical recession
Elizabeth Rudall, Head of Corporate Communications, Institutional | October 2018
the potential for severe disruption IS real even with today’s relatively strong economic conditions.
We have entered a new world order where the U.S. is no longer the global leader – and that has ramifications for not just economies, geopolitics and security but even the shape of the internet, according to Ian Bremmer, one of the world’s most highly regarded political scientists.
In his keynote presentation to the ANZ Trade & Finance Forum in Singapore, Dr Bremmer said this emerging, more fractured, more volatile world would present opportunities as well as threats but the potential for severe disruption was real even with today’s relatively strong economic conditions.
He said the four factors driving the unwinding geopolitical order were changes in population and demographics; open borders; failed wars; and data and technology – in particular social media.
Disruption – in its broadest sense – was an underlying theme of the conference, whether it was tension between the US under Trump and China under Xi Jinping as explored by Singapore’s Emeritus Senior Minister Goh Chok Tong or the very nature of reputation and integrity in a digital world as dissected by Socialnomics author Eric Qualman.
As Dr Bremmer told the forum: “People are empowered with their cell phones to bring down governments,” stressing the dangers of cyber-attacks and need for cyber security.
Dr. Bremmer, President and Founder of Eurasia Group, is credited with bringing the craft of political risk to financial markets and for establishing political risk as an academic discipline.
“When the next economic recession hits, even if it is comparatively mild … then we’re in for trouble,” he said. “The political implications of the next economic down-cycle will be much greater dislocation than anything we’ve experienced in our recent memories.”
“The political implications of the next economic down-cycle will be much greater dislocation than anything we’ve experienced in our recent memories.”
DR. IAN BREMMER, President and Founder of Eurasia Group
Even so, Dr. Bremmer told the Forum current tensions between the US and China may create opportunities for some markets in Asia.
“If the US and China are not doing as much business together, for example in agriculture, then countries in this region are going to export more agriculture,” he said.
Asia benefits from its reputation as a potential “rice bucket” for the rest of the world, according to Dr Bremmer, and as a region is increasingly anti-corruption and less opposed to free trade or globalisation than the US and Europe.
“So in that regard I see most of the economies in Southeast Asia as being more resilient to some of the global challenges we are talking about,” he said.
KEY TAKEAWAYS FROM THE ANZ TREASURY & FINANCE FORUM
ANZ Chief Economist Richard Yetsenga pointed to seven key takeaways from the forum:
1. The global order IS in flux. There is nothing temporary about what is occurring. And the geopolitical implications of the next global downturn are huge.
2. The cyber wars have already started.
3. Today solar power during the day is cheaper than coal. Five years ago it wasn’t.
4. Mediocre scientists and great data will beat mediocre data and great scientists every time.
5. In a world with no personal privacy, integrity and reputation are the same thing.
6. Businesses don’t always prepare future CEOs well for managing their relationships with government.
7. We can’t actually multi-task, we switch-task instead. Organisations face the same constraint, and doing the old while transforming to the new is not always possible.
Wrapping up the one-day forum, ANZ Group Executive Institutional, Mark Whelan, told delegates against a backdrop of major geopolitical issues such as the China-US trade tensions, Brexit and increased market volatility, expert analysis was invaluable.
He said amid such uncertainty, our ability to predict the future based on data - rather than just instinct and experience - will be key to navigating challenges.
“The responsible use of data will be the key competitive advantage in business, driving better customer service, along with greater transparency and increased accountability at all levels in companies, government and society,” Whelan said.
A changing world
We will bring you more coverage on the major topics and themes covered at the ANZ Finance and Treasury forum in coming weeks and months.
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