Today, my focus shifts towards Asia and Latin America and the Caribbean.
Asia’s fate – and perhaps the world’s – depends on China. There are some concerns that Chinese economic statistics are so unreliable that a crisis may be lurking unseen. But if not, and China remains on a reasonably even keel, the region is positioned to chug along nicely.
India’s economy could use a boost, perhaps from an acknowledgement that relying on trickle-down growth is not sufficient.
Latin America and the Caribbean likewise do not have many particularly hot spots, but people will be watching Brazil’s economy and Argentina’s policies for indications of whether trouble might start brewing.
While we can take some comfort that tensions between India and Pakistan are at relatively low ebb, instability and conflict within Pakistan and Afghanistan remain worrying.
In neither country does there appear to be the prospect of a transformative moment, and indeed the withdrawal of foreign forces from Afghanistan could see an unleashing of new political forces there.
President Obama’s post-election visit to Myanmar has drawn even more attention to the rapid opening of the economy there, and put some positive pressure on the government to continue democratization and deal with its ethnic divisions; 2013 will be a decisive year for the possible political and economic resuscitation of that country.
If East Asia can keep the tensions with China at a reasonable level – meaning political accusations but no economic retaliation – the region’s economy should remain stable, and perhaps begin recovering more quickly from the global financial crisis.
The tensions with China, however, may upset the delicate balance of power and allegiances within ASEAN, rendering that grouping less cohesive and effective, and perhaps tempting the island countries (Philippines, Indonesia, Singapore, Malaysia, Brunei, East Timor) to focus more on their sub-region.
Latin America and the Caribbean
So long as Venezuela’s president, Hugo Chavez, remains healthy, the region is likely to remain largely stable. But Chavez and Venezuela’s role as a regional power has passed its peak now; Brazil clearly sets the pace for the region.
2013 could be a decisive year for Brazil’s economy, which has been twisting in many directions. It seems likely that it will be able to avoid a major slump and resume its role as confident leader of the region, even as it accrues more resentment from its neighbours.
Argentina is faced with a new round of financial troubles arising from its 2001 defaults, and will be closely watched by financial experts who already find the country unreliable. If a new default or other emergency arrangement is required, it could increase dissatisfaction with President Fernandez, who is already facing assertive demonstrations against unemployment and economic instability.
Should Argentina default, there may be calls for it to give up its place in the G20, which would at least open up interesting questions about the composition of that powerful body.
In Haiti, the Martelly government could face growing dissent in 2013, especially if the recovery from the 2010 earthquake and the 2012 hurricanes continues to stall and food prices continue to increase; a change of government there, with unknown consequences, cannot be ruled out.
The death of one or both of the Castro brothers in Cuba (they can’t live forever) would likely unleash a power struggle that the U.S. might well want to get involved in, even if covertly. It would likely signal an accelerated transition (things are already changing), but the chances of a messy situation would be high.
And finally, as tax campaigners emerge more strongly – including through ActionAid’s new campaign – and the G8 and possibly the G20 tackle abuses of the tax systems, Caribbean islands (e.g. the Caymans or Antigua & Barbuda) that rely on their status as tax havens may face disruptions.
They would probably be wise to begin looking at other economic models they could pursue.