quarterly forecasts

2017 Third-Quarter Forecast

3 MINS READJun 26, 2017 | 13:54 GMT
The United States will maintain its security alliances abroad, but it will also generate enough uncertainty to drive its partners toward unilateral action in managing their own neighborhoods.
(Getty Images/Stratfor)

Overview

Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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Global Trends

Jun 26, 2017 | 13:53 GMT
Those hoping to fill the United States' shoes in leading the world still have their own existential threats to contend with at home.

Those hoping to fill the United States' shoes in leading the world still have their own existential threats to contend with at home.

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  • The enduring constraints on the White House -- and on those trying to supplant the United States as the world's leading superpower -- will matter far more than rhetoric in shaping global governance.
  • Mixed messages from the U.S. administration won't result in Washington abandoning its traditional allies, but they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia.
  • Despite its vocal support for protectionism, the White House will pursue a more moderate trade policy in practice.
  • Major oil producers beyond the United States will comply with their agreed-upon production cuts for at least the third quarter, though upticks in output in the United States, Libya, Nigeria and Kazakhstan will keep a cap on oil prices.
  • The world's biggest central banks will keep their monetary policies loose as expectations of global reflation diminish.

Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.
Jun 26, 2017 | 13:52 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

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  • The U.S. government will implement the more protectionist policies in President Donald Trump's trade agenda, starting with negotiations to revise the North American Free Trade Agreement.
  • A dissident faction in the Venezuelan government will challenge President Nicolas Maduro, who could lose the military's support in the face of mounting protester casualties and the threat of sanctions from the United States.
  • In Brazil, political parties will start choosing candidates to run in the 2018 presidential race, though the country's wide-ranging corruption investigation will limit their options.
  • The Colombian government will prioritize passing the remaining laws necessary for its peace deal with the Revolutionary Armed Forces of Colombia (FARC), and criminal groups will encroach on the remote but lucrative territory that the rebel group abandoned during their demobilization.
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Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:49 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.

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  • The battle brewing between Qatar and some members of the Gulf Cooperation Council will expose both the flaws in Washington's strategy of relying on a Saudi-led alliance to manage regional conflicts and the widening rift between Turkey and its Gulf neighbors.
  • Meanwhile, conflict will escalate between Saudi and Iranian proxies on battlegrounds scattered from the Gulf to the Levant.
  • Iranian-backed forces will also face a heightened risk of clashing with U.S.-allied forces in Syria as they race to reach the Iraqi border amid the Islamic State's slow retreat.
  • Iran and Turkey, though competing heavily for influence in northern Iraq, will both work to counter the momentum building behind a Kurdish independence referendum.
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Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:51 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.

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  • EU leaders will discuss several proposals to reform the bloc this quarter, but their diverging views will limit room for concrete action.
  • The approval of France's labor reforms legislation will mark an early political victory for President Emmanuel Macron.
  • The elections in Germany in September will not pose an immediate threat to the eurozone because moderate forces will stay in power. Nevertheless, the country's next government will play a crucial role in determining the currency area's future.
  • Poland's relations with the European Union will remain tense, and Warsaw will look to the United States, as well as its neighbors in Central Europe, for political support.
  • The fragile British government will focus negotiations over the Brexit on three main topics this quarter: citizens' rights, the United Kingdom's contributions to the EU budget and the future of Northern Ireland's border with Ireland.
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Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:52 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.

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  • Ahead of a leadership transition at the start of the fourth quarter, infighting within the Chinese Communist Party will reach a fever pitch, complicating Beijing's efforts to preserve stability and political coherence.
  • North Korea will continue to regularly conduct missile tests in spite of the sanctions building against it, giving the United States an opportunity to pressure China on other fronts such as trade, the South China Sea and issues surrounding Taiwan.
  • The United States will keep its security commitments in the region, complicating China's attempts to seek conciliation with members of the Association of Southeast Asian Nations (ASEAN).
  • ASEAN states will work to forge coalitions among themselves and with regional actors in hopes of balancing against the power looming on their doorstep.
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Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:51 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.

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  • Tensions between Russia and the West will continue to run high this quarter as the European Union keeps its sanctions against Moscow in place and the United States considers adding more.
  • The enduring standoff will increase the risk of flare-ups in hot spots scattered throughout the European borderlands, including the Baltics, Ukraine and Transdniestria.
  • As its ties with the West remain strained, Russia will shift its focus to the east -- particularly China -- in search of financial reprieve and geopolitical leverage.
  • Meanwhile, Russia will use increasing instability in Central Asia to step up its security cooperation efforts in the region.
  • As problems add up beyond its borders, Russia will come under mounting pressure at home in the face of a swelling protest movement that coincides with critical gubernatorial elections.
See more on this Region

Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:48 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.

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  • India likely will manage to implement only part of the critical Goods and Services Tax in the third quarter because of disagreements between the federal and state governments as well as onboarding challenges for businesses across the country.
  • Social and economic disruptions caused by Prime Minister Narendra Modi's nationwide ban on cattle sales will give the opposition a pretext to keep the government from passing labor reform legislation during the Parliament's monsoon session.
  • Modi will continue pursuing a diverse foreign policy this quarter, visiting Israel, hosting Japanese Prime Minister Shinzo Abe and dispatching forces to participate in the Malabar naval exercises.
  • Fighting in Afghanistan will intensify as the United States sends more troops to bolster the Afghan National Security Forces in their war against the Taliban.
  • Pakistan will try to subvert Zakir Musa's Hizbul Mujahideen breakaway faction to prevent an anti-Pakistani transnational jihadist movement from taking root in the disputed territory of Kashmir.
See more on this Region

Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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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.

Jun 26, 2017 | 13:47 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
  • Reforms to improve Nigeria's business climate will continue to gain limited traction despite lingering concerns over President Muhammadu Buhari's health.
  • The presidential succession battle within South Africa's ruling African National Congress will heat up as President Jacob Zuma tries to push radical economic reform to energize his support base.
  • Angola's transition process will likely go smoothly. Likewise, in Rwanda, Paul Kagame faces little competition in upcoming elections. But the stalled transitions in Zimbabwe and the Democratic Republic of the Congo, on the other hand, will make little headway.
  • Kenya's presidential election will test the country's progress since the results of the 2007 votes sparked violence, but the risk of conflict will be higher this time than it was in 2013.
  • In July, U.S. President Donald Trump's administration will decide whether to lift select sanctions on the Sudan, a benchmark for the country's revised foreign policy.
See more on this Region

Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia....

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