Quarterly Forecasts

2017 Fourth-Quarter Forecast

3 MINS READOct 2, 2017 | 07:58 GMT
An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst.

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. 

(HUYANGSHU/WIN MCNAMEE/CHUNG SUNG-JUN/ED JONES/YOUNG84/iStock/Getty Images)

Overview

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

Global Trends

In today's world, nations are becoming increasingly interconnected by air, land, sea and cyberspace. As globalization has knitted countries and continents closer together, the borders of the map and the barriers of geography have been rendered, in some ways, obsolete. Now events in one region can more easily have consequences in another, at times even rippling across the globe. We explore those with the greatest impact on international decision-making during the forecast period below.
Sep 28, 2017 | 13:54 GMT
The United States will head into the last quarter of the year facing one of the greatest direct nuclear threats to the American mainland since the Cuban missile crisis.
section Highlights
  • North Korea's nuclear ambitions will occupy most of the United States' attention as Washington searches for ways to halt the progress of Pyongyang's weapons program, even as China and Russia continue to subtly prop up their belligerent neighbor.
  • Distracted by North Korea, the United States will not be willing to create another headache for itself by withdrawing from its nuclear deal with Iran. Russia, meanwhile, will deepen its involvement in several conflicts around the world to strengthen its own bargaining position in talks with the United States.
  • The White House will keep putting its trade policies into practice in the fourth quarter, but despite its tough talk in the opening phase of NAFTA negotiations, the United States will have a hard time persuading Mexico and Canada to meet its steep demands.
  • Across the Atlantic, Europe will turn to the difficult task of reforming institutions within the European Union and eurozone now that national elections in France and Germany have wrapped up.
  • Though the world's oil inventories have declined, they haven't fallen quickly enough to suit the organizers of a pact among oil producers to slash output, signaling the group's likely intent to extend the quota beyond March 2018.

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:55 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
  • Heedless of the sanctions mounting against it, North Korea will continue to steadily conduct weapons tests while the United States pursues every economic and diplomatic tool available to stop it.
  • Next door, China will work to pre-empt the crisis in Pyongyang while fortifying its own administration in Beijing, completing a leadership transition within the Communist Party that will likely result in a strong show of support for President Xi Jinping.
  • Though China will focus on preserving its economic and social stability once the crucial party congress is over, the conclusion of its leadership transition will give Beijing greater flexibility in its foreign policy, making room for it to grow more assertive in South Asia and the South China Sea.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:56 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
  • As EU members discuss institutional reforms, they will expose the strategic differences between the bloc's southern, northern and eastern members and offer a preview of disagreements to come next year.
  • Germany and France will try to preserve their strategic alliance throughout the discussions, which will cover issues such as reforming the eurozone and increasing spending across the bloc, but compromise will be difficult.
  • Central and Eastern European countries will face strategic decisions about their futures, while elections in Austria and the Czech Republic will test the strength of nationalist sentiments.
  • France's efforts to protect national economies from competition within the bloc and to prevent outside investors from acquiring companies in strategic sectors will meet with only limited success.
  • Differences will continue to arise between the United Kingdom and the European Union as the two negotiate the Brexit, but both parties will work to reach an agreement, even if it takes longer than expected.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:56 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
  • Whether or not the White House certifies Iran's compliance with the nuclear deal this quarter, the United States will not abandon the agreement entirely, even as it puts more financial and military pressure on Iran in an effort to contain its influence in the Middle East.
  • Though Iran will respond to rising tension with the United States by easing its relationships with Saudi Arabia and Turkey, Tehran's competition with its regional rivals will continue to play out in proxy battles throughout the Middle East.
  • An independence referendum in Iraqi Kurdistan will lend new momentum -- and tension -- to negotiations between Arbil and Baghdad over oil revenue-sharing and disputed territories as Iraqi politicians prepare for crucial elections in 2018.
  • As the Islamic State continues to lose ground in Syria, the U.S.- and Russian-backed forces combating it will risk coming into contact with each other, increasing the danger of clashes between them that could draw their foreign sponsors further into the fray.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.
Sep 28, 2017 | 13:57 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
  • The United States will try to implement some of its proposed protectionist trade policies during the fourth quarter by working to renegotiate NAFTA to its advantage and advancing a trade investigation into Chinese technology transfer demands on U.S. companies.
  • Venezuela's state-owned energy company and government run the risk of a financial default before the end of the year, raising the possibility of greater social unrest or an attempted military rebellion as the current administration tries to cling to power.
  • Colombia's president will push Congress to pass the legislation necessary to implement his government's peace agreement with the Revolutionary Armed Forces of Colombia, but he may not sway lawmakers before the end of the year.
  • In Brazil, President Michel Temer's coalition will stay strong enough to prevent his removal from office over the criminal investigations underway against him.
  • The Common Market of the South, better known as Mercosur, and the European Union will move closer to signing a free trade deal.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:57 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
  • India's ruling Bharatiya Janata Party will focus on working out the kinks of tax reform implementation during the quarter, bumping land and labor reforms off this year's legislative agenda.
  • Weak credit growth and tepid private investment will contribute to the continuing economic slowdown in India and put pressure on the government to respond with stimulus measures.
  • India will keep building up infrastructure and military assets along its contested border with China to improve its response capabilities, while cautiously expanding its security cooperation with Japan and the United States to counter Beijing's assertiveness.
  • Despite pressure from the United States to change its behavior, Pakistan will stick to its current strategy in Afghanistan as 3,000 U.S. troops arrive, dimming the prospects for negotiations with the Taliban to end the war.
  • India and Pakistan alike will work to contain Zakir Musa's new al Qaeda branch in Kashmir, which threatens both countries with transnational jihadism.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:57 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
  • Increased checks on White House power and expanded sanctions from the U.S. Congress will limit President Donald Trump's options for de-escalating tensions with the Kremlin, while the Russian elections slated for 2018 will keep Moscow from making major concessions to the West.
  • Russia will continue to publicly support the limited sanctions on North Korea that the United States has pushed even as it quietly skirts them behind the scenes. And Moscow probably will veto more substantial measures against Pyongyang.
  • The negotiations over the Ukraine conflict will pick up this quarter because of Russia's proposal to deploy a U.N. peacekeeping force in Donbas, which could ease the pressure on Moscow and give it more leeway in dealing with the United States and the European Union.
  • Ahead of presidential and local elections, the Kremlin will try to manage the deepening divisions and burgeoning protest movements among the Russian electorate.
  • Russia will use the political instability and growing threat of militancy in Central Asia to strengthen its security presence in the region.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

Forecasts

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.

Sep 28, 2017 | 13:58 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
  • As their terms draw to an end, South African President Jacob Zuma and his Nigerian counterpart, Muhammadu Buhari, will work to strengthen the hands of their chosen successors, fueling infighting within their ruling parties as their ability to enact much-needed reforms declines.
  • A historic decision by Kenya's Supreme Court to redo the country's recent presidential election will increase the risk of ethnic violence and constitutional crisis as the expectations of the incumbent and his challenger mount.
  • The differences in the leadership transitions of Angola and the neighboring Democratic Republic of the Congo remain as stark as ever as the former's rigid succession plan steadily progresses and the latter's political process stalls, inviting new international sanctions.
  • Despite insufficient funding and an unclear organizational structure, the new G5 Sahel force will continue to receive political support and resources from France as Paris searches for a way to reduce its military presence in the perpetually unstable region.
See more on this Region

An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures....

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