Quarterly Forecasts

2018 Second-Quarter Forecast

3 MINS READMar 11, 2018 | 22:11 GMT
The White House will bump up against the laws of the United States and the central tenets of the World Trade Organization as it launches a global trade offensive in the name of national security.

As economic and political pressure mounts against China this quarter, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it.

(GOH CHAI HIN/MLADEN ANTONOV/SAUL LOEB/JOE RAEDLE/TOM MIHALEK/FENG LI/TAB1962/DONVICTORIO/KEVIND/STR/AFP/Getty Images)

Overview

All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.
Mar 8, 2018 | 18:33 GMT
The White House's trade policy will fuel market volatility in the second quarter.

As U.S. President Donald Trump's 2018 trade agenda put it, "these are exciting times for U.S. trade policy." That may be the understatement of the year.

section Highlights
  • The White House's economic assault against China will cause collateral damage around the globe, but on their own, tariffs will likely do little to solve the United States' perceived trade deficit problem.
  • As concerns about data privacy and corporate monopolies give rise to new regulations in the West, China will pump its resources into the development of strategic technologies to try to catch up with the United States.
  • Cryptocurrency regulations will proceed apace while more and more countries experiment with the perks of state-backed cryptocurrencies, including insulation from sanctions and diversification away from the dollar.
  • United in their goal of countering the rise of U.S. shale, global producers led by Saudi Arabia and Russia will extend their production cuts and work toward a more enduring cooperation deal.

All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 8, 2018 | 20:57 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
  • As the United States imposes new trade restrictions on China, Beijing will respond in kind, engaging in a tit for tat that could delay China's plans for economic reform.
  • At home Chinese President Xi Jinping will focus on solidifying control over local governments to ensure that they comply with his attempts to overhaul the economy and redistribute national resources.
  • South Korea will struggle to balance between neighbor and ally as tension mounts between North Korea and the United States.
  • Intent on halting China's rise, the United States will forge deeper diplomatic and defense ties with Taiwan -- pushing China and Russia even closer together in the process.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.
Mar 9, 2018 | 15:07 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 White House's new tariffs on imported steel and aluminum will raise prices for U.S. manufacturers and invite retaliatory measures from other countries in the process.
  • Under pressure from Congress and the agricultural lobby, the United States will stay in the North American Free Trade Agreement this quarter, despite Canada's resistance to Washington's protectionist demands and Mexico's reluctance to compromise ahead of its presidential election.
  • In Mexico, established parties such as the Revolutionary Institutional Party (PRI) and the National Action Party (PAN) will fight an uphill battle against general dissatisfaction with the political establishment.
  • Though other countries in the region will become increasingly concerned this quarter about Venezuela's deepening economic crisis, Brazil and Colombia will butt heads over what to do about it.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 9, 2018 | 15:58 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 negotiate ways to boost spending, share financial risk, tax technology giants, and overhaul the bloc's agricultural and cohesion funds in the coming quarter.
  • However, the divided bloc will water down, postpone or only gradually implement the proposed measures.
  • Italy, saddled with a hung Parliament, probably won't make disruptive moves that would precipitate a eurozone crisis. By the same token, it will have a tough time enacting reforms meant to stave off trouble for the currency area down the line.
  • Though the United Kingdom and the European Union will negotiate the terms of their trade relationship once the Brexit is complete, they won't reach a firm deal in the next three months.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 9, 2018 | 16:45 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
  • In spite of U.S. sanctions against it, Iran will lean on Europe to keep its nuclear deal with the global powers intact, exercising restraint on such thorny issues as ballistic missile tests to keep the West divided over how best to contain it.
  • Turkey's ambitions could stir up trouble, potentially bringing it into conflict with Iran's forces and local allies in Syria and with Europe in the energy-rich eastern Mediterranean.
  • Saudi Arabia and its powerful Sunni neighbors will try -- albeit unsuccessfully -- to check Iran's regional influence by shaping the outcome of Lebanese and Iraqi elections in their favor.
  • Political contests in Egypt and Tunisia will showcase the inability of North African countries to provide the security and economic guarantees their citizens demand. 
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 9, 2018 | 17:12 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
  • A deepening rivalry with China -- on land, at sea and economically -- will push India into closer defense cooperation with the United States.
  • More frequent militant attacks in Kashmir and increasing incidents of cross-border fire from both sides of the Line of Control will add tension to the relationship between India and Pakistan.
  • Intensifying violence in Afghanistan will further strain relations between Pakistan and the United States, prompting Islamabad to strengthen its ties with Russia, China and Iran.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 9, 2018 | 17:39 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
  • As the standoff between Russia and the West drags on, the United States will expand limited sanctions against Moscow, which, in turn, will seek increased investment from partners in the Middle East and Asia-Pacific to cushion the blow.
  • The Kremlin will pursue social and economic reforms at home to try to revive the Russian economy and curb protests, while a political reshuffle and restructuring of the security services will shake up the balance of power in Moscow.
  • Diplomatic discussions between Russia and the West over a U.N. peacekeeping mission to eastern Ukraine will intensify this quarter, but probably will not yield a deployment.
  • The countries of Central Asia will increasingly coordinate with one another -- as well as with Russia and China -- to combat militancy and terrorism in the region.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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.

Mar 9, 2018 | 18:21 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 southern Africa, new leaders will try to chart a fresh course for their countries with ambitious reforms and appeals for foreign investment.
  • President Joseph Kabila will continue to cling to power in the Democratic Republic of the Congo as he imposes new levies and royalties on his country's lucrative mining sector.
  • As militant groups in the Sahel region gain skills and recruits, the Group of Five Sahel Force and France's Operation Barkhane will face additional hurdles in their fight against insurgency and extremism.
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All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it....

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