The year ahead in 2023
More musings scanning an arbitrary horizon
What are the key geopolitical events to look out for in the year ahead? We outline some pinch-points.
Conflict risks: Ukraine, Iran, East Africa.
Political risks: Brazil, Turkey, and the US.
Macro risks: China, inflation, and EU immigration.
A year ago we outlined some of the key events that would shape 2022, including: “Russia’s NATO ultimatum; the new Bundesbank President; the revision of fiscal rules in the EU; Draghi’s fate; the global election cycle; and, of course, the evolution of monetary policy.”
Of those events, the war in Ukraine has come to dominate. Monetary policy was more interesting than was anticipated, partly due to the inflation impact of the war. Policy normalisation has been faster than imagined, while central bank balance sheet contraction is now the norm for most major central banks (but not yet Japan.)
We wondered how the new Bundesbank President would influence the monetary policy debate. It is hard to say what influence any one individual has; more likely the hawks gathered in strength alongside price pressures throughout the year. On our reading, Governor Nagel has been a constructive influence in the policy discussion, joined by his compatriot Schnabel on the Executive Board and fellow hawks on the Governing Council to affect a policy shift.
As for politics, Draghi has now gone from the scene—gone but not forgotten. In Brazil, Bolsonaro has also moved on while fiscal risks are growing under his successor.
But what about 2023?
Well, we will be posting more aggressively on the substack—bringing more real time commentary on politics and the macroeconomy by harnessing our in-house experience on a more frequent basis.
For now, we emphasise our top 3: conflict risks; political risks; and macro risks.