As we head into 2023, there are lots of uncertainties. One of which is whether the world's largest economy, the US, will sink into a recession, and thereby drag the whole world down with it. While speculation is rife that a recession is not far away, economists point out that the next market cycle may be initiated by Black swan events - events that may be unforeseen but have a significant impact on society.
The following black swan events, if they occur, may have far-reaching effects on the state of the global economy in 2023:
A Rise in the Price of Gold
The price of Gold may rise to a new high as investors scramble for it as safe haven following uncertainty in their local economies. As the realization sinks in that inflation is here to stay, markets and central banks scramble to adjust. In response, the price of gold skyrockets, reaching an all-time high of $3,000. This marks a major shift in the global economy and signals a new era of economic uncertainty.
The EU Creates its own military
The EU learning from the recent events in the Russia- Ukraine war and opt to create its own military, With the challenges facing the region and the lack of support from the U.S. military, the European Union decides it was time to take matters into its own hands. They agree to create their own armed forces to protect against potential threats, such as the Russia-Ukraine conflict. It's a big step, but one that's necessary for this day and age.
France's Macron Resigning
Macron caves in to mounting pressure and resigns, throwing France into an uncertain political future. This marks a significant shift in the country's political landscape and puts it in a difficult position in the EU.
The UK Tries to Rejoin the EU
The UK runs out of ideas on how to bolster its economy, and out of desperation coupled with widespread protests hold a referendum to rejoin the EU. This results in political turmoil and economic uncertainty as the country are split are in the middle on whether to continue with Brexit or rejoin the EU.
Global Price Control on Basic Products
The government-imposed price controls and subsidy programs spiral out of Control. Economies across the world start imposing price controls on basic products in an effort to shield their populations from increasing commodity prices that are getting out of control. Superficially, they look ideal and sensible. However, they ultimately lead to unintended consequences that spiral out of control.
Further US Sanctions on Russia
The USA imposes more sanctions on Russia and issues alerts to countries that trade with Russia. This causes tensions in countries across the world that may want to side with Russia. Determined to break away from the US monopoly in global finance and its dictatorial tendencies in world trade, Russia, China, and a host of other countries opt to create their own reserve asset.
New Energy Projects
Tired of being held hostage by OPEC, the richest nations in the world come together to launch an energy project that will shake the world to its core. Get ready for a revolution in energy.
Conclusion
While some of these events look plausible and may come to pass, it is worth noting that the scale of their impact may not be as widespread as foreseen. Black swan events are usually analyzed with hindsight. However, one thing is for sure, as we move into 2023, economies across the world are steadily moving from globalization and embracing a self-preservation model where sovereign interests triumph over global cooperation.