2023 Top Geopolitical Risks

While the prioritization and relevance of each of these risks will be different for each organization, EGA sees the following issues as the primary threats to prepare for in 2023.  


Global Economic Slowdown 

  • The key takeaway: This is the weakest global growth profile since 2001, excluding the global financial crisis and the acute phase of the COVID-19 pandemic (IMF). 

  • When to watch: Q1 2023 will be an important marker for analysts watching China’s reopening following years of its zero-Covid policy, the effects of energy prices and continued global inflation, and central bank policies.  

  • Where the impact will fall: Impact will be felt globally, though the European Union (EU) and China could be hardest hit, while all markets will be affected by the economic slowdown. 

  • The business imperative: Prepare for stagnant growth and potentially significant downturns. 

Though economic experts’ consensus is mixed on whether global economies will experience a full recession, vulnerabilities, or abrupt decline, one thing is clear: 2023 will be a difficult year for growth across most regions. Global economies are confronted by a range of geopolitical challenges, including: the ongoing Russia-Ukraine War, China’s Covid crisis, climate-related events, unpredictable and increasingly protectionist trade policies, and ongoing pandemic-related economic distortions. These pressures are felt across economies, exemplified by inflation and subsequent interest rate hikes, supply chain disruptions, energy price hikes, and a hot labor market. 

While the economic slowdown will impact economies around the world, the US, China, and the EU will be disproportionately impacted, while emerging markets will see the best chance for sustained growth. US GDP is predicted to grow at a rate of 1% in 2023 – down nearly half of the 2022 forecast – as companies prepare for a slowdown in consumer spending and delayed recovery from pandemic challenges. In China, continued shocks from the end of its zero-Covid policies, lockdowns, a potential spike in infections during the Lunar New Year season, and softening real estate market all point to what is expected to be “the lowest growth rate in China since the 1970s,” outside of the 2020 pandemic, according to the OECD. The EU will also face rising energy, agricultural, and housing rates as the Russia-Ukraine War continues to result in dramatic inflationary pressures and cost-of-living crises across the region. 


Continued Supply Chain Challenges  

  • The key takeaway: The supply chain issues witnessed at the height of the pandemic are far from over – the decline in demand and continued difficulties in recruiting labor are driving the challenge. 

  • When to watch: Supply chain challenges should lessen by late summer 2023, though how China manages a potential Covid spike post-Lunar New Year and a difficult labor recruiting market (particularly in the US) may continue to hamper production. 

  • Where the impact will fall: Supply chain shortages affect all aspects of global markets. 

  • The business imperative: Pressure for onshoring, friendshoring, and nearshoring will continue and should be a business priority, as well as retaining talent for manufacturers, especially as countries implement more protectionist trade policies. 

The global supply chain that was once fraught with a post-pandemic consumer demand boom is now struggling under the weight of weakened demand and oversupply amid economic challenges. The maritime industry is seeing a dramatic drop in shipping container prices that has taken many by surprise – cargo container prices from China to the US West Coast fell 90% year-over-year. This sharp decline, due to decreased demand, has also impacted China’s manufacturing capabilities. On top of this, some Chinese factories have shut down weeks earlier than usual for Chinese Lunar New Year, which most companies have anticipated, but could still potentially cause intensified delays coming off of China’s relaxing of its zero-Covid policy. The lack of demand pressures is causing shortages up and down the supply chain, affecting raw material availability, product delays, manufacturing capacity, and ship utilization. 

Supply chain labor has also posed a challenge, as workers in key industries including, US railways, US West Coast ports, and British railways and postal services have staged or threatened strikes in recent months. On top of episodic decreases from strikes, the American Trucking Association reports an 80,000-person shortage of truckers to transport goods, with similar shortages across US manufacturing. As supply chain pressures increase, trade partnerships are also shifting, and they will continue to reorient in 2023 to fill gaps that still remain from the height of the pandemic.  


US Presidential Election Ramp Up 

  • The key takeaway: The 2024 presidential election will put a spotlight on challenging socio-political conversations, heightening employee and customer interest. 

  • When to watch: Additional Republican presidential contenders will likely announce their intentions throughout 2023, challenging former President Trump’s campaign announcement in November 2022. Democrats are also weighing the possibility of challenging incumbent President Biden, who is expected to formally announce in early 2023.   

  • Where the impact will fall: US businesses and stakeholders will begin seeing national news focused on campaigns and will need to prepare for candidates that target those companies or issues important to them. 

  • The business imperative: High-profile companies should prepare to be drawn into the political fray – or even mentioned by candidates – as potentially large primary fields launch and primary elections move earlier in the calendar. 

With Donald Trump announcing his reelection campaign in November 2022, the 2024 US presidential race has already begun. The Republican primary contest – which initially appears to include a tough battle between former President Donald Trump and Florida Governor Ron DeSantis, among other likely candidates – will take over much of the news and agenda setting in Washington. DeSantis won in a landslide reelection 2022 campaign and he stands to gain from President Trump’s weak midterm performance, where many of Trump’s endorsed candidates failed to be elected.  

Currently, with Republicans narrowly in control of the House, many Republican lawmakers will use the next two years leading up to 2024 to pick sides – Trump or a new guard. The result will shape the future of the Republican Party and important policies to come. A Republican primary fight will also likely result in increased posturing around ESG/“woke capitalism,” abortion access, LGBTQ+ issues, racial justice, and other social topics, ultimately affecting workforces across the country. As employees (60%) are looking for CEOs to speak out about controversial social and political issues that they care about, companies will have to be prepared for how they will handle thornier issues in the run-up to the 2024 presidential election. 


Ukraine/Russia Conflict 

  • The key takeaway: The war is likely to continue. Major differences over control in the Donbass make peace talks between Ukraine and Russia in 2023 very difficult. Appetite for negotiation will likely be dependent on either country’s capabilities: specifically, if Ukraine will continue to be reliant on Western support and if Russia can weather Western sanctions. 

  • When to watch: Impact will be felt throughout 2023, but with potential emphasis on the beginning of the year as Russia sees the impact of its latest force mobilization and improved equipping of its force. 

  • Where the impact will fall: Surging energy prices will continue to destabilize the global economy. Western countries’ ability to insulate themselves from Russian energy will revolve around their ability to fast-track alternate energy sources while diversifying their energy import makeup. Other commodity sectors will likely experience price surges and supply chain disruptions, including fertilizers and grains. 

  • The business imperative: Companies should continue to monitor fluctuating commodity prices, their own business’ exposure to affected markets, and the role that actors such as the US, China, Turkey, and the EU will play in steering both Russia and Ukraine to an end of the war.  

The Russia-Ukraine crisis continues to be the most disruptive global geopolitical event in the political, economic, and social sphere. As the war continues to cause volatility in oil and gas prices, and the EU seeks to diversify, alternate energy sources such as coal, nuclear, and renewables will all see increased demand. Russia’s relentless barrage on Ukraine’s critical infrastructure will place further impetus on Zelensky’s efforts to use diplomatic channels to strengthen defense systems.  

The US and Europe have been Ukraine’s biggest supporters during the conflict, providing both military and financial support, but their appetite to continue support will likely be tested as domestic economic challenges continue. The US, whose military support dwarfs that of any other country, will be operating with a newly Republican-controlled House of Representatives in January. Republican Speaker of the House, Kevin McCarthy, has, alongside other Republicans, signaled his reluctance to continue providing a “blank check” to Ukraine. Nevertheless, bipartisan support for Ukraine is likely to continue.   


Pressures of Global Migration 

  • The key takeaway: As we saw after the initial wave of Syrian migration into Europe in 2015-2017, varying domestic attitudes towards refugees eventually manifested in new political movements in reaction to the sudden population changes.  

  • When to watch: Throughout the year and around the world, multiple refugee crises from conflict regions and failing states are putting significant pressure on other countries to take in millions of displaced people.  

  • Where the impact will fall: Europe has continued to absorb the Afghan, Syrian, and Ukrainian crises, in addition to economic migration and those fleeing conflict in regions of Africa, and the US continues to feel pressure on its southern border, as well as pressure on Florida’s coasts as Haiti continues to unravel. 

  • The business imperative: Companies should be prepared to see greater scrutiny on their immigration and human rights positions (especially relative to their supply chains), and should also examine ways that significant waves of immigration are influencing local politics in their major areas of operation.  

In 2022, Europe saw the influx of over seven million Ukrainian refugees fleeing conflict (and an estimated 700,000 Russians), all of whom were offered legal status in any EU country. Conversely, many asylum-seeking migrants that crossed the Mediterranean from north Africa and Arab states were not welcomed as warmly. In Italy, which has seen the influx of 100,000 migrants this year, a far-right party came to power with harder line positions on migration. In the US, as Haiti continues to decline and pressures mount on the US’ southern border, there is increasing pressure on the Biden Administration. 

As these humanitarian tragedies unfold, countries and companies (along with their employees) will grapple with the political, economic, and ethical questions posed by these mass waves of migration from poor to richer nations. In Ukraine, Haiti, and the Horn of Africa, millions are facing significant food insecurity, which will likely intensify migration pressures and the need for humanitarian action and policy solutions in 2023. 


Climate-Related Events  

  • The key takeaway: Climate change will have an increasingly large impact on people, land and businesses and, as we saw in 2022, we remain ill-prepared to address climate-related events. 

  • When to watch: Climate-related weather events are more frequent all year round. Summers, however, tend to bring about some of the most impactful events. 

  • Where the impact will fall: Climate change and its impacts are felt globally, however, the Global South often bears the worst outcomes due to proximity, population density, and underfunded mitigation and adaptation infrastructure, among other causes.  

  • The business imperative: From startups to global corporations, companies will have to look ahead and adapt their business to a world in which climate-related events become more frequent, costly, and harmful to people, operations, and the bottom line. 

Almost every industry, government, and society has felt the weight of recent climate-related events. From agriculture and transportation to energy and healthcare, climate change has changed the way that businesses operate. In 2022, heatwaves caused droughts that upended global supply chains, major flooding events cost lives and livelihoods, and massive hurricanes disrupted economic activity. In total, globally there were 29 climate-related disasters with damages over a billion dollars. But according to a recent survey, only one-third of companies have a strong emphasis on the risks that climate change poses for their business. 2023 will be a test – there will be more climate-related events, but businesses and governments must be prepared to respond. 


Climate Policy  

  • The key takeaway: If governments can align on climate policies, tracking, and accountability, businesses will need to quickly adapt to new regulations. 

  • When to watch: Major climate policies tend to emerge out of global convenings or political pressures. We expect the period following the new presidency of the EU (Sweden, the green finance expert), COP28, and China’s increasing involvement in biodiversity policy to spark new approaches. We’ll also be closely watching the period leading up to the start of CBAM in October 2023 to see if the US and EU can agree upon a cross-border regulatory framework. 

  • Where the impact will fall: Businesses, especially those that are underprepared, under diversified, and energy intensive, will feel the brunt of new climate policies. However, the onus will be on governments and new regulatory regimes to implement and hold businesses to account. 

  • The business imperative: For businesses to have the best chance at meeting the climate policy moment, they need to be part of the conversations early, keep a steady pulse on oncoming policies, conduct assessments to determine which aspects of their business may be impacted, and make clear plans for how to respond. 

Governments in almost every region and industry are rapidly introducing and negotiating new landmark agreements on climate policy. 2022 was a historic year for climate policy adoption – from carbon pricing models proposed for the shipping industry, to the historic loss and damage agreement at COP27, to the US’ aggressive climate investment through the Inflation Reduction Act, to the EU’s Carbon Border Adjustment Mechanism (CBAM). In 2023, these alliances and policies will be tested as stakeholders work through how these policies are actually solidified, deployed, adjusted and tracked. 

We will also see more climate policies, such as the development of a global plastics treaty. These policies will continue to constantly emerge, and we are witnessing just the start of how various techniques, in the form of incentives, regulations, or bans, among others, will be implemented. 2023 will be a critical year for climate policy, with the first Global Stocktake culminating at COP28 in Dubai. Though the outcome of the Stocktake remains unclear, countries will face mounting pressure to address implementing important climate financial multilateral commitments and domestic pledges.