quarterly forecasts

2016 Third-Quarter Forecast

5 MINS READJul 11, 2016 | 00:09 GMT
The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier.

The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier.

(CHRIS J RATCLIFFE/AFP/Getty Images)

Overview

The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Europe

To the west of Eurasia lays Europe, a region predisposed to division. It is surrounded on nearly all sides by islands and peninsulas that make it difficult for Europe to cohere. The northern half of the continent, moreover, sits on a plain whose short, meandering rivers tend to empower countries without forcing them to work with others. The southern half is situated on more mountainous terrain that has historically impeded the creation of strong, unified economies. As a result, Europe is a continent riven by pockets of distinct cultures whose differences are all too often irreconcilable.

Jul 11, 2016 | 22:00 GMT
Europe is a continent riven by pockets of distinct cultures whose differences are all too often irreconcilable.

Europe is a continent riven by pockets of distinct cultures whose differences are all too often irreconcilable.

section Highlights
  • The European Union will begin to deal with the fallout of the Brexit vote.
  • Some of the largest eurozone members will see a quarter of political volatility. 
  • The migration agreement between the European Union and Turkey should largely hold during the quarter, but its continuity will be under constant pressure. 
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Eurasia

Eurasia is the world’s most expansive region. It connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia. Forming the borders of this massive tract of land are the Northern European Plain, the Carpathian Mountains, the Southern Caucasus Mountains, the Tien Shan Mountains and Siberia. At the heart of Eurasia is Russia, a country that throughout history has tried, to varying degrees of success, to extend its influence to Eurasia’s farthest reaches — a strategy meant to insulate it from outside powers. But this strategy necessarily creates conflict throughout Russia’s borderlands, putting Eurasia a near constant state of instability.

Jul 11, 2016 | 22:16 GMT
Eurasia connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia.

Eurasia connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia.

section Highlights
  • Russia and the West will remain locked in an intractable standoff.
  • Russia will also continue to court the Asia-Pacific for investment as its economic crisis drags on.
  • The political crisis in Ukraine will modestly stabilize.
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Middle East and North Africa

The Middle East and North Africa is the world's crossroads. It encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between. The story of the region, as is so often the case of places stuck between foreign players, is the story of trade, exchange and conflict. The traditional powers of the region are Turkey and Iran — Saudi Arabia and Egypt are the current Arab powers — and their competition for influence over the region's weaker states makes the Middle East and North Africa an arena of violence and instability.

Jul 11, 2016 | 02:42 GMT
The Middle East and North Africa encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between.

The Middle East and North Africa encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between.

section Highlights
  • The Syrian civil war will continue to be a defining feature of the Middle East.
  • Ankara is determined to contain Kurdish expansion in northern Syria and to mitigate the terrorist threat posed by the Islamic State. 
  • Iran will make incremental progress on opening up its petroleum sector to foreign investors.
  • Saudi Arabia and its GCC allies will continue to wait out a correction in the oil markets.
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Asia-Pacific

The Asia-Pacific is home to more people than any other region. Centered on the western rim of the Pacific Ocean, this region includes the easternmost countries of continental Asia as well as the archipelagos that punctuate the coast. Several of these countries, most notably China, experienced rapid economic growth in the second half of the 20th century, giving the region a new sense of global economic relevance that continues today. That relevance, however, depends largely on China, a power in transition whose rise is testing the network of U.S. alliances that have long dominated the region. How effectively Beijing manages its transition will shape the regional balance of power in the decades to come.

Jul 11, 2016 | 03:07 GMT
Centered on the western rim of the Pacific Ocean, the Asia-Pacific region includes the easternmost countries of continental Asia as well as the archipelagos that punctuate the coast.

Centered on the western rim of the Pacific Ocean, the Asia-Pacific region includes the easternmost countries of continental Asia as well as the archipelagos that punctuate the coast.

section Highlights
  • Beijing's chief goal this quarter will be to maintain stability. To that end, the government will cautiously monitor its place in the global economy in the wake of Brexit.
  • The ailing economy will play into the most significant political event in Japan during the third quarter: the upper house elections.
  • Regardless of new economic policies, North Korea is unlikely to halt development of a survivable nuclear deterrent capability.
  • Weakness in exports, domestic expenditures and global investment will constrain the South Korean government's efforts to strengthen its economy.
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Americas

The Americas stretch from the Arctic Circle in Canada to the southern tip of Chile. This geographically, culturally and politically diverse region is home to the United States, a nation whose geography helped it become the foremost economic and military power in the world — an ascendance aided in part by bringing Mexico and Canada into its sphere of influence. Farther south, the nations of South America are like islands, separated by vast spaces of impenetrable mountains, rivers and jungles. Try though these countries may to integrate more closely, deeper ties such as those that characterize North America will prove elusive.
Jul 11, 2016 | 13:28 GMT
This geographically, culturally and politically diverse region is home to the United States, a nation whose geography helped it become the foremost economic and military power in the world

This geographically, culturally and politically diverse region is home to the United States, a nation whose geography helped it become the foremost economic and military power in the world

section Highlights
  • Venezuela's political opposition will continue to press for a referendum to be held this year so that an election for the president's successor can take place.
  • Now that the Colombian government has reached a firm cease-fire with the Revolutionary Armed Forces of Colombia, Bogota's attention will turn toward solidifying and implementing a permanent peace deal.
  • Brasilia and Buenos Aires will lobby to amend certain aspects of the South American trade bloc.
See more on this Region

The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

section

South Asia

Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders. The Himalayan Mountains form the northern border of South Asia, whose two main rivers, the Indus and the Ganges, support the region’s great population centers. India is the region’s dominant country, home to the world’s fastest growing economy. But its rivalry with neighboring Pakistan, a fellow nuclear power and growing consumer market, has made South Asia one of the world’s most dangerous nuclear flashpoints. The region is also a testament to how militancy and militarism can undermine the regional integration needed to unleash higher economic growth.

Jul 11, 2016 | 13:35 GMT
Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders.

Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders.

section Highlights
  • New Delhi will try to amend the Goods and Services Tax Bill. If passed, this would create a single tax regime for all India.
  • The Pakistani military will continue the last phase of anti-militant Operation Zarb-e-Azb in the northwestern region of North Waziristan.
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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Sub-Saharan Africa

Sub-Saharan Africa is a study in diversity. Covering an area that spans the entire width of the continent beginning at the Sahara Desert and ending at the southernmost tip of South Africa, the region is home to countless cultures, languages, religions, plants, animals and natural resources. It’s no surprise that it captured the imagination of Europe’s earliest explorers — and that it continues to capture the imagination of current world powers eager to exploit it. And yet despite the region’s diversity, Sub-Saharan African countries have common challenges — transnational terrorism, rapid population growth, endemic poverty and corruption — that prevent them from capitalizing on their economic potential. The coming years will be critical for the region, especially as its political institutions mature in a rapidly globalizing world.

Jul 11, 2016 | 13:49 GMT
Covering an area that spans the entire width of the continent beginning at the Sahara Desert and ending at the southernmost tip of South Africa, Sub-Saharan Africa is home to countless cultures, languages, religions, plants, animals and natural resources.

Covering an area that spans the entire width of the continent beginning at the Sahara Desert and ending at the southernmost tip of South Africa, Sub-Saharan Africa is home to countless cultures, languages, religions, plants, animals and natural resources.

section Highlights
  • In Angola, the ruling party will begin to prepare for the president's eventual departure.
  • The Nigerian government will struggle to satisfy all the stakeholders in the oil-rich Niger Delta as it negotiates with militants.
  • Municipal elections in South Africa will provide a picture of the health of the African National Congress.
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The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier....

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