The risks that matter for the region

(Nov 20): The world economy has not had it this good for well on a decade. Virtually every corner of the globe is enjoying growth except for countries suffering political or other crises. With the immediate threats to economic growth allayed, however, new risks are appearing. Media reports have focused on geopolitical risks such as North Korea, but there are growing financial risks as well as a cloud of concern over the global trade regime that is so vital for regional economies.

So, what are the risks that really matter and how exposed are regional economies to them?

Geopolitical risks: uncertain, unquantifiable, but unlikely to be imminent
There has been much written in the media about North Korea’s nuclear programme and China’s assertive conduct in the South China Sea. These concerns certainly have substance, but the tensions are unlikely to crystallise imminently. We suspect that potential convulsions in the Middle East could pose more of a threat.