Inflation
The world remains in constant flux due to ever-changing circumstances. Just when we thought the Corona period was behind us, we found ourselves in a new crisis: The war unleashed by Russia in Ukraine. The sanctions imposed on Russia by Western countries sent us into a huge energy crisis. This also fuelled inflation sharply and led to huge price increases of food and other products.
Staff shortages
We are also seeing a huge staff shortage in a short period of time. As a result, wages are rising, but relatively many people are able to keep their heads above water. 2022 was a positive year for many companies. 2023 has certainly not got off to a bad start, but we are seeing an increase in the number of companies running into payment problems and going bankrupt themselves. There are also other developments that will have an effect on our economy.
Tensions between China and the West
China has been slowly expanding its global influence for decades. At the rate they are doing so, they seem to be overtaking the United States. The latter will not let that happen easily and where Trump (America First) started by protecting its own economy, Biden is now pushing it much harder. The US is trying to keep the West on its side and thereby gain support. For instance, they are trying to ban ASML from selling its latest technological machines to China. Also, both the US and Europe are increasingly moving industry back from low-wage countries. China's strong economic growth for corona has increased prosperity, production costs have also risen sharply in China and a lot of production is already disappearing to cheaper surrounding countries, such as Vietnam. The situation in Taiwan is also hugely critical. China wants to see Taiwan as Chinese territory again and the likelihood of military conflict is huge. By strengthening ties with Russia, China seems to be making a choice after all, and the Russian invasion of Ukraine seems like a prelude for China to invade Taiwan.
China will also have to move fast now because the ageing population there is going so fast that in just under eight years, population shrinkage will hit the economy hard.
Role of India
India's role seems limited compared to China, but the country has a huge population as well as economic potential. Politically, the country is not yet stable and it also seems more at the mercy of Russia and China.
Middle East
The Middle East has been politically unsettled for years. Recently, conflicts between Israel and the Palestinians have flared up again. Iran also regularly makes its presence felt and supports various activist organisations. Internally, it tries to crack down on popular protests.
Polarization
In many countries, we have seen that differences in political views are so great that it leads to conflict. With Trump, we saw it in the United States and new conflicts may also arise in the new elections. But we also see polarisation growing in Brazil, Turkey and some European countries. This brings political instability, which will obviously have a negative impact on the economy.
Minimising risks
In an increasingly volatile world, it is very wise and advisable to identify risks and minimise them to an acceptable level. Credit insurance including political risk hedging can help in this regard.
