The Biggest Global Risks in 2021: A Look Back at Key Challenges

Introduction : February 5, 2021, by Sergio Fontana

As the world entered 2021, many hoped that the COVID-19 pandemic would come to an end. However, the crisis continued, bringing with it several global risks that would shape the year. The pandemic did more than just affect public health; it also disrupted economies, political landscapes, and social systems worldwide. This article will discuss the main global risks for 2021, focusing on the challenges highlighted by the Eurasia Group, a political risk consultancy based in New York City.

The Global Landscape in 2021

The Eurasia Group’s report paints a picture of a world grappling with deep uncertainties. The United States, traditionally seen as a global leader, was described as “the most powerful, politically divided, and economically unequal of the world’s industrial democracies.” Meanwhile, China emerged as a strong competitor to the U.S., operating as a state-run, authoritarian, and techno-surveillance regime. This backdrop set the stage for several risks that would influence global dynamics throughout the year.

1. Latin America: COVID-19 and Elections

In Latin America, the pandemic’s impact was severe. Widespread access to vaccines was not expected until the latter half of 2021, which meant that the region would continue to struggle with the virus for much of the year. Countries like Argentina, Mexico, Ecuador, Peru, and Chile, which were already facing economic difficulties, were particularly vulnerable. The combination of the pandemic and upcoming elections posed a significant risk to social stability. With fiscal deterioration, there was concern that spending on essential social services would decrease, exacerbating existing inequalities.

2. Low Energy Prices in the Middle East

The COVID-19 pandemic led to a global reduction in energy consumption, hitting the Middle East hard. Many countries in the region, which rely heavily on energy revenues, faced dual challenges: the health crisis and a sharp drop in income. Iraq, where oil accounts for 90% of government revenue, was highlighted as facing the greatest challenges. The report warned that these economic pressures could lead to increased social unrest and even violence. Other countries like Algeria, Saudi Arabia, the United Arab Emirates, and Qatar were also at risk due to low oil prices, with potential political instability on the horizon.

3. Economic Pressures in Turkey

Turkey faced significant economic challenges in 2021, partly due to its poor response to the COVID-19 pandemic. The country managed to avoid a financial crisis in 2020 by implementing market-friendly measures and adopting a more orthodox monetary policy. However, the central bank’s decision to raise interest rates had political implications. It weakened President Recep Tayyip Erdoğan’s support base, increasing social tensions. The report suggested that Erdoğan might respond by taking tougher measures, potentially leading to increased tensions with the European Union and neighboring Middle Eastern countries. The possibility of military confrontation was also mentioned as a rising concern.

4. Increasing Tensions Between the U.S. and China

Despite a change in leadership in the U.S., relations between the U.S. and China remained tense in 2021. The two global powers were engaged in a competition to address the world’s problems, including the COVID-19 pandemic and climate change. President Joe Biden’s administration sought to form a multilateral front against China’s economic and security policies by recruiting allies. However, the report warned that this approach might not be easy and could lead to backlash against countries that align with the U.S. The rivalry between the U.S. and China was expected to be a significant source of global tension in 2021.

5. Climate Change: From Cooperation to Competition

Climate change was another major risk highlighted for 2021. The report noted that the global response to climate change was shifting from cooperation to competition. Countries like Japan, South Korea, the EU, the UK, China, and Canada had committed to achieving carbon neutrality by mid-century. With President Biden’s commitment to rejoining the Paris Agreement, the U.S. was also set to play a leading role in climate discussions. However, this increased focus on climate action could lead to a fractured world, with different regions pursuing competing agendas. The result, according to the report, could be a world drifting further apart rather than coming together to tackle the climate crisis.

6. Prolonged and Uneven Recovery from COVID-19

The final major global risk for 2021 was the prolonged and uneven recovery from the COVID-19 pandemic. While the development of vaccines offered hope, the distribution process itself posed significant challenges. In many countries, the rollout of vaccines was slow, leading to continued disruptions in daily life. The economic impact of the pandemic was also uneven, with some countries and populations recovering faster than others. This uneven recovery had the potential to stir public anger and unrest, particularly in regions where the gap between the rich and the poor widened. The concept of a K-shaped recovery, where different sectors of the economy recover at different rates, was a significant concern.

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The key Global Risks In 2021 And Their Impacts: According to the insights from https://finanzasdomesticas.com/principales-riesgos-mundiales-2021/

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The global risks outlined by the Eurasia Group for 2021 underscored the complexity of the challenges facing the world. From the ongoing impact of the COVID-19 pandemic to geopolitical tensions and the urgent need to address climate change, the year was marked by uncertainty. Navigating these risks required a coordinated global effort, as well as a recognition of the interconnectedness of the issues at hand. As the world continued to grapple with these challenges, the importance of resilience, adaptability, and cooperation became ever more apparent.

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