Predicting the Top Risks for 2013

One week into 2013, and many pundits have already released their predictions for the top stories of the new year. Some stories are predictable, such as the likely political fight over the debt ceiling in March. Other stories are unexpected, just as few anticipated that 2011 would have seen such rapid change in the Arab Spring movements across the Middle East and North Africa.
Ian Bremmer, political scientist and president of the Eurasia Group, is an expert at predicting the unexpected. Today, the Eurasia Group releases its report on the top risks to watch in 2013, with a number of surprising results.
Bremmer argues that in 2013, political risk in the developed world is overstated. “Concerns about the fiscal cliff in the United States have been overplayed. So too the fragmentation of the euro zone and the impact of continued zero growth in Japan.”
The major risks of 2013, Bremmer believes, are centered in emerging markets, particularly in China and the Middle East. Describing 2013 as “the first true post-financial crisis year,” Bremmer writes that “the era of emerging market abundance is over.”
China also faces serious internal risks, Bremmer says. “In a Chinese economy that’s increasingly information driven, a larger, more well-educated middle class requires access to information as part of their work environment…and expects it as part of their daily life,” Bremmer writes. “That in turn is directly undermining the political legitimacy of China’s top leaders.”
Bremmer also discusses the political risks in the Middle East, particularly Syria, and what he calls “red herrings”: issues about which the public will likely hear a great deal, but that ultimately will not affect politics or markets in the coming year.