Recession Creates New Geopolitical Risks

Economic downturn could rattle world stage

“And, when (not if) economic turmoil strikes and spreads, the world of geopolitics could be destabilized, as existing flashpoints are amplified or new ones are created out of the blue.”

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As the global economy briefly entered the “red zone” on Monday, reflective by events like Japan’s Nikkei 225 posting its largest single-day drop in history, talk of worldwide recession is spreading. But, unlike in 2007-08, economic downturn is not the only crisis facing the globe. Today, the most pressing global crises are all geopolitical (i.e. Israel-Iran, Ukraine-Russia).

What makes the situation even more dangerous, for economy and geopolitics, is that a future recession may not have just one starting point, but multiple. While Monday’s drop was due to US recession fears, centered around the lackluster US jobs report for July, where the US economy added just 114,000 jobs, missing projections by big margins (a Dow survey had projected 185,000 jobs), there are other economic strains too, such as: