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15 December 2022 A “perma-risk” outlook: volatile times are here to stay Russia’s invasion of Ukraine triggered the return of have significant international implications, including geopolitical risk, and we think this is here to stay. We on to what extent the US will continue to underwrite deem the risk of an outright military confrontation European security as well as that of Taiwan. Expect between major powers as low, given that governments China, Russia and other large powers to watch will likely prioritize tackling big challenges on the domestic this space closely. Economic warfare via sanctions front. In Europe, the war in Ukraine and its political and (mainly on tech) should continue in any scenario, with economic implications will continue to dominate the policy Southeast Asia a clear economic winner of intensifying debate. The energy crisis threatens to become a political US-China tensions. China looks set to prioritize crisis should the EU fail to respond in a unified manner in domestic affairs, too – with a focus on generating the next two years, with EU elections scheduled for May sustainable economic growth and social peace – after 2024. Further political and economic divergence could a spike of social discontent over extended Covid-19 aggravate the longstanding trend of falling support for the restrictions in late 2022 served as a warning shot. two largest parliamentary groups (EPP and S&D) in favor In Latin America, the verdict on whether the region of Eurosceptic parties. This in turn could mean even more will continue to turn left is still out (watch Argentina’s political deadlock and less progress on important reform general election in 2023) as tough economic initiatives. Meanwhile US general elections in November headwinds and rising interest rates are reducing fiscal 2024 will show whether Democrats manage to build on room for pricey policy promises. recent resilience - which in turn would likely lead to more protectionist policies. The US election results could also 19

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