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ING global economic outlook 2023 December 2022 Our 3 calls for global politics Geopolitics continue to be an important driver for financial markets and the global economy. Predicting future geopolitical moves is always a bit of a fool's game but here Carsten Brzeski are three developments to watch out for Global Head of Macro and Chief Economist, Eurozone, Germany, Austria [email protected] The Russian President, Vladimir Putin's next moves on Ukraine will continue to dominate the international agenda 1 The war in Ukraine goes on It's not nearly a year since Russia invaded Ukraine, and the biggest geopolitical story of the year will continue to dominate the news and economic agenda in 2023. It's still a conventional military conflict, but the range of potential future paths is wide, whether that be a ceasefire or a nuclear escalation; neither of those seems highly likely at the moment. There is, of course, much condemnation of Russia's actions. But there's no global alignment on the conflict, so next year will be a real test of commitment by the G7 group of countries and the NATO military alliance as to how it continues to support Ukraine both militarily and financially. Russia will continue to seek more economic cooperation with former Soviet 'CIS' countries, 'BRICS' nations, such as China and India, and OPEC. The conflict will continue to impact global economies, not least with the reformatting of global energy-supply chains, the risks to the agriculture market, higher inflation, changed capital flows, altered bilateral imports and exports, along with increased defence spending. Let's also not forget the shifting regional role of the US dollar, the euro and other currencies given their continued sanction 'weaponisation'. 2 Risk of more territorial claims The war in Ukraine shows us, yet again, that aggressive foreign policy and even a regional military conflict can sometimes be used by national elites as a way of distracting their people from domestic political and economic issues. One of the biggest potential flashpoints is China and Taiwan. But let's not forget that disputes such as those between Turkey and Northern Cyprus, and Azerbaijan and Armenia over Nagorno Karabakh continue to bubble away. Taiwan could become more of a focus for financial markets next year, although any moves here are highly unlikely. Turkey is set to hold presidential and parliamentary elections in June. Current economic issues, including the depreciation of the lira and extremely high inflation, have already

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