Is Geopolitical Recession Imminent?

February 22, 2017 02:20 AM
World ripples

World order faces seismic shifts that will shape decades to come

Everything the world knows about the U.S. has been flipped on its head with the election of President Donald Trump. That vote, coupled with other factors around the world, will expedite geopolitical recession. That’s the assessment of a new report by the Eurasia Group, a New York-based consulting firm.

“This year marks the most volatile political risk environment in the postwar period, at least as important to global markets as the economic recession of 2008,” the report notes. “It needn’t develop into a geopolitical depression that triggers major interstate military conflict and/or the breakdown of major central government institutions. But such an outcome is now thinkable.”

Without question, the global system is experiencing its greatest shift in at least 70 years, agrees Peter Zeihan, an author and futurist who spoke this year at The Executive Program for Agricultural Producers (TEPAP) in Austin, Texas. The transition to a new dynamic will be completed in the next decade, and the U.S. will remain key.

“Not only is our part of North America the richest part of the world, it is the most secured,” Zeihan points out. “We are condemned to be a super power.”

In the eyes of the Eurasia Group, geopolitical recession appears to mean that major world powers such as the U.S., Europe and Asia will increasingly turn inward. Decades-old relationships meant to ensure economic, political and military security will begin to fray. 

People are increasingly skeptical of financial institutions and involvement in global affairs. “Even if we wanted to be internationally minded, we can’t play right now,” Zeihan points out. “We don’t have a party structure to even have the conversation. We will be widely erratic.”

Yet he points out the U.S. will find itself in a position of strength as millennials mature and other countries become more senior, by comparison. Consumption is the only reason America has avoided a recession, he says. “We’re the only country with millennials,” Zeihan notes. “In 15 years, we’ll be the only country with money and people.” 

More Market Movers

Beyond the demographics that will tilt in favor of the U.S. in the future, other factors will shape global market dynamics, says Peter Zeihan, an author and futurist. Here are some of the areas he recommends watching.

Energy Production: “North America is functionally energy independent,” he says. “Technical independence is not far away.” The U.S. has an edge in natural gas and soon will have an electricity advantage, Zeihan adds.

China Competition: U.S. superiority in agriculture will ensure China, which has the world’s largest population at more than 1 billion people, turns to North America for food needs if it ever faces a financial crisis. It is dependent on its close neighbors, Zeihan says.

NAFTA Negotiations: In the commotion surrounding the exit of Great Britain from the European Union, some have returned to a years-old notion that the UK might become part of NAFTA. That could have trade implications as the U.S. also negotiates its status in the deal.

Mexico Opportunities: Most companies don’t want to invest in Mexico because of drug wars. But for entrepreneurs who choose to stake their claim, they could sell goods to the U.S. while benefiting from low labor costs, Zeihan says.


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Spell Check

bad axe, MI
3/2/2017 07:44 AM

  Were off to see the wizard , the wonderful wizard of OZ. Where dose AG WEB find these guys . Reuters news had a story on GDP growth for the largest countries in the world by well respected economists , here's the way it's going to be in 2030; China's economy is at 18 trillion now same as the US now , it will double in size to 38 trillion by 2030 with little credit market debt per person , pop; 1,300,000,000. United States economy 18 trillion now will grow to 24 trillion by 2030 , slow growth because of massive credit market debt of 68 trillion, pop; 335,000,000. India's economy is at 8.5 trillion now it will grow to 18 trillion by 2030, with little credit market debt per person , pop; 900,000,000. I have no idea how this guy comes to the conclusion that we have all the people and money.

Plains, GA
3/2/2017 09:40 PM

  Agweb, "the very fake news"

Dr. Jimmy T (Gunny) LaBaume
Alpine, TX
3/2/2017 12:28 PM

  AG WEB, where do you get these clowns. That is about the silliest article I've ever read. -- jtl, 419


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