While the Russia-Ukraine war remains as brutal as ever, its global effects are likely to be more modest. The risks of direct Nato involvement or the use of tactical nuclear weapons by Russia are lower today than they were at earlier points in the war. Equally, while the war initially produced a spike in energy, food, fertiliser and industrial metal prices, even Europe — the most heavily affected region — has absorbed the shock with only a modest growth slowdown (or a stall in some cases), not the severe recession that many analysts feared.
We have entered a period of intensifying geopolitical rivalries and conflicts. Russia’s war on Ukraine is now in its third year, the Israel-Hamas conflict could still become a regional war and the deepening cold war between the United States and China may yet turn hot over Taiwan sometime this decade.
If Donald Trump wins the US presidential election in November, the world will be even further destabilised. Yet, these risks have had only a limited effect on economies and markets so far. Might that soon change?
