Eurasia Group publishes Top Risks predictions for 2023

By Sarah Bendorf.
Updated Jan 3, 2023

NEW YORK (PRWEB) January 03, 2023 - As 2023 begins, the people of Ukraine are marking nearly a year of war and conflict in their homeland. Russias invasion of its neighboring country in February 2022 signaled the latestand most egregiousbreach of international norms by an increasingly reckless state with little to lose from further Western sanctions or isolation on the world stage. The impact of the war in Ukraine has bled over to other geopolitical and economic spheres, including a worldwide energy crisis, global inflation shockwaves, and a redrawing of alliances as countries and corporations reassess their relationships with Russia.

These are some of the key takeaways from Eurasia Groups Top Risks, the firms highly anticipated annual review of the ten biggest threats to the trajectories of nations, industries, and institutions. Unveiled each January, Top Risks helps investors, companies, and members of the public prepare for and respond to opportunities and challenges wherever they invest or do business. The report is co-written by Eurasia Group President and Founder Ian Bremmer and Chairman Cliff Kupchan.

The #1 risk for 2023 is Rogue Russia. Bremmer says: A humiliated Russia will turn from global player into the worlds most dangerous rogue state. In 2022, despite much bluster directed at the West, the Kremlin was careful to keep its war on Ukraine contained within the country, avoiding direct confrontation with NATO and hoping to divide the united Western front in support of Kyiv. In 2023, Putin cant afford to be that cautious. This is troubling, Bremmer says. Nuclear saber-rattling by Moscow will intensify. Putins threats will become more explicit; hes likely to move tactical nuclear weapons closer to Ukraineand publicize itand we could see an increase in the alert status of Russias nuclear arsenal, Bremmer says.

Other risks in the report include: Maximum Xi (#2), Weapons of mass disruption (#3), Inflation shockwaves (#4), Iran in a corner (#5), Energy crunch (#6), Arrested global development (#7), Divided States of America (#8), TikTok boom (#9), and Water stress (#10).

The report also includes several red herringsissues that, despite popular attention, are unlikely to pose significant threats or drive instability in the coming year. On the bright side, says Kupchan, threats to democracy's future, which appeared dire last year, look overrated now, given the glaring leadership weaknesses evident in Russia, China, and Iran. In Europe, there is stronger cohesion in EU policymaking, and in America, midterm elections came off with few of the stresses we saw in 2020.

As Eurasia Group marks its 25th anniversary year, we are for the first time publishing separate standalone reports with the most important takeaways of Top Risks 2023 for Brazil, Canada, and Japan. These addendums further illuminate the ways in which global risks play out in diverse regions around the world, with unique implications for states and businesses.

For journalists, Bremmer and Kupchan will host an on-the-record press conference today, 3 January, at 10:30 ET / 15:30 GMT to discuss these risks and take your questions. To participate, register here.

Below is an abbreviated summary of all ten Top Risks for 2023. View the full report here.

1- Rogue Russia A cornered Russia will turn from global player into the worlds most dangerous rogue state, posing a serious and pervasive danger to Europe, the US, and beyond. Bogged down in Ukraine, with little to lose from further isolation and Western retaliation, and facing intense domestic pressure to show strength, Russia will turn to asymmetric warfare against the West to inflict damage rather than employ overt aggression that depends on military and economic power that Russia no longer has.

Putins nuclear saber-rattling will escalate. Kremlin-affiliated hackers will ramp up increasingly sophisticated cyberattacks on Western firms, governments, and infrastructure. Russia will intensify its offensive against Western elections by systematically supporting and funding disinformation and extremism. Attacks on Ukrainian infrastructure will continue. In short, Rogue Russia is a threat to global security, Western political systems, the cybersphere, and food security. Not to mention every Ukrainian civilian.

2- Maximum Xi Xi Jinping now has a command of Chinas political system unrivaled since Mao with (very) few limits on his ability to advance his statist and nationalist policy agenda. But with no dissenting voices to challenge his views, Xis ability to make big long-term mistakes is also unrivaled. Thats a massive global challenge given Chinas outsized role in the world economy.

We see risks in three areas this year, all stemming from Maximum Xi. The ill-effects of centralized decision-making on public health will continue with the spread of Covid-19. Xis drive for state control of Chinas economy will produce arbitrary decisions, policy volatility, and heightened uncertainty for a country already weakened by two years of extreme pandemic-mitigation efforts. Finally, Xis nationalist views and assertive foreign policy will increasingly provoke resistance from the West and from Chinas Asian neighbors.

3- Weapons of mass disruption Recent advances represent a step-change in the potential of artificial intelligence (AI) to manipulate people and disrupt society, and 2023 will be a tipping point for this trend. A new form of the technology, known as generative AI, will allow users to create realistic images, videos, and text with just a few sentences of guidance. Large language models will pass the Turing testa Rubicon for machines ability to imitate human intelligence. Advances in deepfakes, facial recognition, and voice synthesis software will render control over ones likeness a relic of the past.

These tools will help autocrats undermine democracy abroad and stifle dissent at home, and they will enable demagogues and populists within democracies to weaponize AI for narrow political gain at the expense of democracy and civil society.

4- Inflation shockwaves The global inflation shock that began in the United States in 2021 and took hold worldwide in 2022 will have powerful economic and political ripple effects in 2023. It will be the key driver of global recession, add to market volatility and financial stress, and produce disruptive effects on politics in every region of the world.

5- Iran in a corner Nationwide anti-government protests continue. At the same time, Tehran has escalated its nuclear program in dramatic ways, all but ending any chance of reviving the nuclear deal. And now Iran is supplying Vladimir Putins military with deadly weapons. As Iran faces convulsions at home and lashes out abroad, this year will feature new confrontations between the Islamic Republic and the West.

6- Energy crunch A combination of geopolitics, economics, and production factors will create much tighter energy market conditions, particularly in the second half of 2023, raising costs for households and businesses, increasing the fiscal burden on importing governments and widening the rift between OPEC+ and major consumers.

7- Arrested global development Over the past two generations, global GDP tripled, almost every country grew richer, and more than a billion people escaped extreme poverty to join the ranks of historys first global middle class. That progress has been thrown into reverse by mutually reinforcing shocks: the Covid-19 pandemic, the Russia-Ukraine war, and the global inflation surge. In 2023, billions of people will become more vulnerable as economic, security, and political gains are lost. The global middle class will shrink, and greater political instability, within and among countries, will follow.

8- Divided States of America The 2022 midterm elections halted the slide toward a constitutional crisis at the next US presidential election as voters rejected virtually all candidates running for state governor or state attorney general who denied or questioned the legitimacy of the 2020 presidential election. But the US remains one of the most politically polarized and dysfunctional of the worlds advanced industrial democracies heading into 2023. Extreme policy divergences between red and blue states will make it harder for US and foreign companies to treat the United States as a single coherent market, despite obvious economic strengths. And the risk of political violence remains high.

9- Tik Tok boom Born between the mid-1990s and the early 2010s, the members of Generation Z are the first with no experience of life without the internet. Digital devices and social media have connected them across borders to create the first truly global generation. And that makes them a new political and geopolitical actor, especially in the United States and Europe. Gen Z has both the ability and the motivation to organize online to reshape corporate and public policies, making life harder for companies everywhere and disrupting politics with the click of a button.

10- Water stress This year, water stress will become a global and systemic challengewhile governments will still treat it as a temporary crisis. Water stress requires a transition from water crisis to water risk management. That shift will not materialize in 2023, leaving investors, insurers, and private companies to figure out how to handle this challenge on their own.

About Eurasia Group: Eurasia Group is the world's leading global political risk research and consulting firm. By providing information and insight on how political developments move markets, we help clients anticipate and respond to instability and opportunities everywhere they invest or do business. Our expertise includes developed and developing countries in every region of the world, specific economic sectors, and the business and investment playing fields of the future. With our best-in-class advisory and consulting offerings and GZERO Media, the Eurasia Group umbrella provides the marketplace with a complete political risk solution. Headquartered in New York, we have offices in Washington, London, San Francisco, Brasilia, Sao Paulo, Singapore, and Tokyo, as well as on-the-ground experts and resources in more than a hundred countries. 'Politics first grounds our work: Politics is the lens through which we view the world, and we are committed to analysis that is free of political bias and the influence of private interests.

Media enquiries Gregory Roth Director of Communications Eurasia Group media@eurasiagroup.net

Katharine Starr Associate Director of Communications Eurasia Group media@eurasiagroup.net