The Top 10 Global Risks for 2023

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Global Threats to Watch

The world faces some of “the most dangerous” risks in decades in 2023, according to a report published this week by the Eurasia Group, a political risk consultancy.

“A small group of individuals has amassed an extraordinary amount of power, making decisions of profound geopolitical consequence with limited information in opaque environments,” according to Ian Bremmer and Cliff Kupchan, the president and chairman, respectively, of the Eurasia Group.

“On a spectrum of geopolitics with integrated globalization at one extreme, these developments are at the other extreme, and they’re driving a disproportionate amount of the uncertainty in the world today.”

Indeed, with Putin and Xi topping this year’s report and the Iranian government sliding into the top 5, the extent to which global power (and risks) have become concentrated, and in some cases isolated, is a common theme in this year’s assessment.

Here are the 10 greatest risks in 2023, according to the Eurasia Group:

10. Water Woes

In 2022, East Africa experienced the worst drought in four decades; rivers in the western United States reached dangerously low levels, forcing water cuts; and dwindling water levels drained hydropower dam reservoirs in China. Such water woes are increasingly common in both the developing and developed worlds. Historically, wealthier nations have treated water scarcity as “a temporary crisis” that could be “mitigated through bilateral aid,” says the report, preventing preparations for an issue that will complicate operations for “two-thirds of companies globally” and affect much of the world.

9. The Rise of Gen Z

Generation Z – born during the mid-90’s to the early 2010’s – accounts for more than 30% of the world population, according to the report. As its presence in the working world grows – it’s expected to constitute 27% of the global workforce by 2025 – so too will its influence. This generation of internet natives has already shown a “marked distrust of institutions” and an ability to foster change outside of traditional channels of influence.

“Not only is this generation the most racially and ethnically diverse in Western history, but its members are also more aware of systemic racism, gender issues, and economic inequality—and they accordingly lean heavily progressive,” according to the report.

As a result, the report argues, this cohort will place “unprecedented pressure” on companies and policymakers to weigh in on the issues facing the world now and in the years to come.

8. Political Polarization in a Divided United States

Sharp political divides remain in the United States, with states embracing radically different ideas on civil rights, environmentalism and even governance. While California ponders racial justice and reparations, for example, Texas and Florida continue to challenge voting rights. This divergent landscape puts the country at risk for further politically-motivated violence reminiscent of Jan. 6 and makes “long-term investment planning more difficult for both American and foreign firms,” according to the report.

7. Declines in Global Development

The triple threat of climate change, inflation and the continued war in Ukraine will continue to set back decades of progress in public health, women’s rights and living standards, according to the report. Rising food prices and food insecurity could push millions of people into poverty, reverse gains in child labor reduction and worsen educational gaps caused by the COVID-19 pandemic. Additionally, the reduced status of women – from the United States’ backslide on abortion to the obliteration of women’s rights in Afghanistan – bodes poorly for the push for gender equality. Pandemic-era cuts to social spending and stagnating economic growth could also force a further 10 million girls in West and Central Africa into early marriage by 2030, reversing decades of declines in the practice.

6. Energy Shortages

Though the predicted oil shortage stemming from the war in Ukraine did not quite manifest, the world isn’t out of the woods yet, according to the report. The Eurasia Group anticipates that Russian oil production declines, low levels of OPEC spare capacity and the lack of an Iran nuclear deal, among other factors, will prompt an uptick in oil prices.

The report also predicts spikes in natural gas prices as Europe weans itself off cheap Russian gas, and a high risk of temporary power outages in Europe due to the resulting supply constraints.

5. A Politically Isolated Iran

Since the summer of 2022, the streets of Iran have been alight in protest – first against the compulsory hijab and later in memory of 22-year-old protester Mahsa Amini, whose murder by the country’s Morality Police has become a symbol of the regime’s corruption and autocracy. Reports of hundreds of Iranians killed during the protests have soured attitudes – both domestically and abroad – against the Iranian government. Simultaneously, the country has continued its development of nuclear weapons, bereft of any nuclear deal and amid rising tensions with Israel, all of which the report says bring into question “the stability and longevity of the Islamic Republic.”

4. Inflation on the Rise

The inflation crisis that started in the U.S. and eventually spread globally will have far-reaching implications in 2023, according to the report. “It will be the principal driver of global recession, add to financial stress, and stoke social discontent and political instability everywhere,” the Eurasia group found.

In 2022, governments around the globe introduced interest rate hikes in an attempt to slow record inflation, with varying degrees of success. As fuel prices continue to rise and supply chain troubles persist, the report predicts “households and companies will feel the pinch.”

3. Tech: Democracy’s Downfall?

Once harkened as a boon for democracy, technology has become a mixed bag as a liberalizing force. The proliferation of bots and artificial intelligence can create and spread disinformation, making facts nearly indistinguishable from fiction. Technologies capable of protecting populations can and have been weaponized by governments and bad actors to increase surveillance, manipulate elections and stifle dissent. While humanity innovates, it also faces the daunting task of protecting itself from its own creations.

2. In Xi We (Must) Trust

With “power unrivaled since Mao Zedong,” China’s President Xi Jinping holds one of the world’s largest economies in his hands, which, according to the Eurasia Group, could spell trouble. Citing the suddenness with which he ended the zero-COVID policy and Xi’s “no limits friendship” with Russia, this year’s risk report warns of “policy volatility” under a now-centralized Chinese government.

1. Putin’s Power Plays

Nearly a year on from its invasion of Ukraine, Russia has yet to secure a decisive victory. With two new NATO applicants, a costly war and stacking sanctions weighing on Russian President Vladimir Putin, the Eurasia Group predicts a Putin who might be a great deal less cautious in 2023. “Nuclear saber-rattling,” increased shelling of Ukrainian cities and cyberattacks on the West could all be in Putin’s 2023 playbook, according to the report. However, Russia’s targeting of Western critical infrastructure and leaders is unlikely, the report finds.

The Top 10 Global Risks for 2023

  1. Putin’s Power Plays
  2. In Xi We (Must) Trust
  3. Tech: Democracy’s Downfall?
  4. Inflation on the Rise
  5. A Politically Isolated Iran
  6. Energy Shortages
  7. Declines in Global Development
  8. Political Polarization in a Divided United States
  9. The Rise of Gen Z 
  10. Water Woes

Source: US News