Reported by Consejeros Editorial Team
Based on strategic realism, not pessimistic prophecy, and with the aim of providing Spanish companies with a tool to better understand the events that are shaking up the geopolitical, economic and commercial landscape, Cesce’s Country Risk Unit has produced a new edition of its International Outlook report, the eleventh. “Our country’s business community cannot be a mere spectator in a scenario such as the current one; it must have actionable information to make strategic decisions,” explained Pablo de Ramón-Laca, executive chairman of Cesce, at the presentation of the study.
Through five articles, Cesce’s experts have examined issues such as sovereign debt and its use as an instrument of financial power, tensions at the world’s main maritime chokepoints, the Generation Z protests in emerging markets, Taiwan’s strategic role, and the European Union’s existential dilemma in the face of the reconfiguration of the world order.
During the presentation of the report at the Ortega Marañón Foundation, these ideas were organised around two round-table discussions. The first discussed the relationship – seemingly non-existent at first glance – between global debt and youth revolts in various emerging markets. Global debt currently stands at the staggering figure of 353 trillion dollars, three times the world’s GDP, a risk that particularly affects emerging economies due to their lower capacity to absorb it. “High levels of debt prevent governments in the Global South from providing a satisfactory response to the problems that inflation and unemployment have created for the younger generation. Their response has been to challenge the authorities with historic protests,” explains Lidia Candal, the economist responsible for Africa. She highlights Kenya, Nepal and Morocco as countries where this paradigm shift has taken place.
Furthermore, debt, coupled with higher interest rates and growing geopolitical rivalry, is no longer merely a financial issue, but is becoming a tool for exerting political pressure, capable of undermining nations’ autonomy. On this point, María José Chaguaceda, the analyst responsible for Latin America, points out that “the yuan cannot yet rival the dollar as an instrument of economic coercion because it is not enough to be a major exporting economy; one must also have deep, open markets and institutional trust. But China is making moves.” Zambia, the first African country to default due to Covid-19, underwent a highly complex debt restructuring, in which China’s position at the negotiating table as a creditor proved decisive.
The seas and oceans are vital arteries for global trade, with 90 per cent of internet traffic and global trade travelling by sea, making logistical chokepoints critical.
This strategic power is very clearly illustrated by Taiwan’s significance on the geopolitical stage. Just one statistic: international trade passing through the Taiwan Strait is worth $3.4 billion, six times more than trade passing through the Strait of Hormuz. Furthermore, 70 per cent of the global semiconductor market depends on the Taiwanese company TSMC. “A blockade of this route would cause a shock we cannot even imagine. It would also happen very quickly, as stocks of this material are measured in weeks, and we would not be able to draw on reserves as we did during the Hormuz crisis,” explains Rafael Loring, economist responsible for Asia.
And finally, in the article entitled “The Taiwan Enigma”, Rafael Loring analyses the strategic, economic and military significance of this island and the global disruptions that a conflict over its control could cause. The analysis includes some figures that highlight its importance: the Taiwan Strait handles trade worth 3.4 trillion dollars; TSMC accounts for over 60 per cent of the semiconductor market and over 90 per cent of advanced chips, meaning that any conflict – or even a blockade – has the potential to trigger an immediate global shock.
