25/03/2023
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It takes 21 knots to compose the Horizonโฆ and as you cross Horizons, the Seas change colour. There are 7 Seas between China and Dakar and at the turn of every longitude, 115 miles, the dialect has changed, the colours are different and the Postage Stamps are churned out differently.
At the Break of this New Era, we begin with the Chinese Century flying on the Tail of a Dragon and bringing their Silk Route Vision to the World. It will have a place in the Future International Order in this New Technological Age of Advancement as it knits Civilizations together.
Beginning with US-China Tensions in 2018 and then graduating into Covid-19 in Wuhan (2019) and then the Russia โ Ukraine War (2022) there is going to be Slowed Economic Growth in 2023-24. Inflation. Rising Interest Rates. International Political Tensions are predicted. Global Inflation will decrease to 6.5% (2023) and 4.1% (2024). 47% of the World Population will be living on 7$ a day.
The Winter of 2022 will be challenging but 2023 will be worse.
Global Trade sees a 3% GDP Loss in the Asia Pacific with a Loss of Export Markets, a Splintering of Complex Production Networks, Fragmentation (short term), Lower Diversification, Slower Productivity Growth due to Reduced Foreign Direct Investment, Tepid Productivity Post Covid, Diminished Investment and Output Losses.
In the last 20 years, China has emerged as an important Creditor but remains Reluctant to participate in Debt Relief efforts used by OECD Creditors. The question remains how will they exact repayment?
Due to Rising Interest Rates, some countries are seen as Weakening Economies: Afghanistan. UAE. Pakistan. Tunisia. Djibouti. Saudi Arabia. Somalia. Qatar. Palestine. Egypt. Morocco. Nigeria. Yemen. Sri Lanka. Zimbabwe. Russia.
Thereafter, these above Countries will have a Limited Safety Net; Tightening Financial Conditions; Rising Costs of the American Dollar; Euro Debt; Debts to IMF, ADB; World Bank.
Meanwhile, the IMF is accommodative of debt-burdened countries provided they outline a future path towards fiscal sustainability.
These countries (Default Nations) that participate in purchasing US Treasury Bond Debt to the Tune of $700 Billion and more, tend to anticipate Economic Recovery, generating financial conditions/asset prices in favour of the US Govt.
One works to Aim for Macro prudential Regulations, Build Foreign Exchange Reserves; Work towards Medium Term Fiscal Plans; Boost the Global Supply of Food and Energy; Ease Labour Market constraints and Strengthen Global Trade Networks.
The Finance Outlook for 2023 predicts a Weakening Economic Output. A fraction of Countries (G7?) will rise Interest Rates simultaneously leading to a Worldwide Crunch in Asia. Policy Rates will increase. And Heavily Indebted Countries will Default or Ask for a Bail Out.
We are looking at a String of Financial Crises.
Key Risk Scenarios: Following Russiaโs War on Ukraine, a Coalition of Democratic Nations (European/American) imposed Sanctions on Russia locking up its Capital. US Banks served Compliance Notice at leaving Chinese Shores in Response. If China takes Taiwan in 2023, the ramifications would be a Bipolar World with the Group of 77 and China vs. QUAD-G7.
As the World began tearing up at Russiaโs War in Ukraine, it will divide categorically in two if China takes Taiwan.
In the future, we see Two Trading Blocs: Group of 77 and China; and the QUAD- G7. These two blocs will belong to a Divided World. For Countries that do Trade with both Regions, the West and the east, Loyalties will be Divided but with a Higher Addendum for GDP Growth; Higher Foreign Investment and Zero Loss in the Labour Market. The Forecast is for Fragmentation in Asia which will certainly lead to Trade Blocs.
Kristilina Gorgieva (IMF): We must safeguard and promote trade openness โ both at home and by cooperating to build a stronger global trading system centred on the World Trade Organisation.
Meanwhile, the New Economy Forum, in Singapore is mapping out a Plan to Rebuild Fractured Supply Chains, Harness New Technologies, Fund Development and assist Decarbonisation.
The IMF predicts a Global Growth Slowdown to 2.7% in 2023 where the EU, US and China will Slow; and China, Japan and Asia will Be Stable. The Reasons for this are Russiaโs War on Ukraine, the Cost of Living Crisis, and Chinaโs Economic Slowdown.
Future Trends : Digital Services. Financial Inclusion. Green Transition. Chinaโs yuan.
Thus we see that 2023-24 are going to be Fractured Years that will see the conclusive Divorce of the Various New Trading Blocs. And a New Set of International Orders in the Global Race for Hegemony.
