Growth, recessions, fiscal policy, monetary policy, currencies and global business deals. GIS experts provide forecasts and potential scenarios for all of the economic trends that shape geopolitics.
Sovereign wealth funds and preserving oil wealth
Sovereign wealth funds have become an important tool for stabilizing the economies of oil and gas producers. In well-governed countries with strong institutions, they can substantially mitigate long-term risks. But in some developing states, the depletion or mismanagement of such funds could pose a serious threat.
Angola girds for political transition
Angola’s President Jose Eduardo dos Santos has announced he will retire in 2018. Potential successors include the country’s defense minister and the general secretary of the ruling party – both longtime dos Santos allies. Whether the transition will be smooth depends on how the economy fares and the new leadership’s ability to manage change. A power struggle – perhaps led by one of Mr. dos Santos’ children – is not out of the question.
After Brexit, what is Europe?
Brexit can be a healing shock to the European Union. The United Kingdom’s decision to opt out forces Brussels to finally confront a central issue: what is Europe’s true identity. The European project can thrive only if it is democratically developed from the ground up, by its diverse and pragmatic member nations, not imposed on them by a centralized bureaucracy that is accountable to no one but attempts to control everything.
China lacks the wherewithal to adjust to demographic decline
Within a decade, China will enter a difficult stretch. As its population begins to shrink and rapidly turn gray, the country will experience monumental strains in its economic, social and political systems. Beijing will try to tackle the challenge with fewer resources than China’s richer neighbors in the Far East can throw at the problem.
Colombia’s peace pact: now comes the hard part
The Colombian government and the FARC guerrillas have signed a long-awaited peace agreement. Now comes the hard part: making it work. There is no guarantee that Colombians will approve the deal in a referendum on October 2. If they do, there will be many other challenges ahead, including asserting state control over the entire country and reintegrating fighters into society. Though all of that will be difficult, the alternative is much worse.
India raises its profile in Africa
India is taking keener interest in Africa as it tries to buttress its strategic position against Chinese encroachments in the Indian Ocean. Trade, investment and security cooperation are all expanding rapidly, especially in Mozambique, which New Delhi regards as a crucial bridgehead. But India is still a long way from matching China’s footprint on the continent.
Cheap money policy does not fool citizens
Central bankers and a sizeable group among western economists and political leaders believe that low to negative interest rates are encouraging consumption and economic growth. The policy has not been working, however, because citizens rightly distrust it and appreciate the importance of savings.
Central banks and corporate bonds
The latest scheme to have the European Central Bank buy corporate bonds is unlikely to turn quantitative easing into an effective stimulus policy. But there may other motivations at work. As a camouflaged bailout for big European banks and a bureaucratic carrot to slow corporate flight, expanded debt purchases make sense to policy makers in Brussels and Frankfurt.
China’s next big test: reforming state-owned firms
China’s state-owned enterprises dominate huge swaths of the economy, but their outlook is grim. Rapidly growing debts from politically driven loans, risky real estate deals and lower investment returns imperil their future and that of the entire Chinese economy. Many will be privatized, merged, or otherwise dissolved within the next few years. How this reform is managed will have a huge impact on China and possibly the world.
Mexico’s energy reforms and production outlook
Faced with output declines and the shale revolution, Mexico had little choice but to reopen its oil and gas industry to foreign investors. The early results have been promising, but President Enrique Pena Nieto’s energy reforms are not out of the woods yet.