The economic
warning signs are
flashing yellow. In
Germany, the U.K.,
Italy, Brazil and
Mexico, growth has
stalled. In Japan, busi-
ness confidence has turned negative for
the first time since 2013. China’s indus-
trial output is growing at its slowest pace
in 17 years. An inverted yield curve has
U.S. economists on recession watch.
But the real uncertainty is coming
from the biggest surge in decades of the
kind of political volatility that
is relevant to markets. Politi-
cally motivated trade fights
are under way between coun-
tries that make up half the
global economy—from the
U.S. and China, to the U.S. and
Europe, to South Korea and
Japan. The most worrisome of
these economically damaging
political fights is the ongoing
trade war between Washing-
ton and Beijing, which shows
no signs of easing. President
Trump wants to avoid any appearance of
a climbdown in this fight. So does China’s
Xi Jinping, who must also signal strength
in the growing confrontation with pro-
democracy protesters in Hong Kong.
There are oTher sources of politi-
cally induced economic trouble. The IMF
noted in July that “the projected recov-
ery in growth between 2019 and 2020 in
emerging market and developing econo-
mies relies on improved growth outcomes
in stressed economies such as Argentina,
Turkey, Iran, and Venezuela, and there-
fore is subject to significant uncertainty.”
At the moment, there’s little sign of re-
covery in any of these four countries. In
Argentina, voters have turned on Presi-
dent Mauricio Macri ahead of October
elections. His likely successor, Alberto
Fernández, may not prove as economi-
cally reckless as his choice of former
President Cristina Fernández de Kirch-
ner as running mate might suggest, but
he’s hardly reassuring to investors. In An-
kara, embattled President Recep Tayyip
Erdogan continues trying to manipulate
Turkey’s economy to protect his politi-
cal popularity. Iran, facing renewed U.S.
sanctions, is lashing out at Europe for not
helping ease its economic pain. And Ven-
ezuela’s slow- motion catastrophe contin-
ues with little hope for a breakthrough to
spare its people further pain.
In Asia, a bitter dispute over Japan’s
colonization of the Korean Peninsula
from 1910 to 1945 has triggered a fight
with dangerous consequences for both
countries. The result is an
escalating conflict between
Asia’s second and fourth
largest economies—at a
time when the U.S.-China
trade war is already weighing
on both.
In Europe, the political
stakes rose once again on
Aug. 20 as Italian Prime Min-
ister Giuseppe Conte abruptly
announced his resignation.
Market jitters continue, and
expectations grow that far-
right leader Matteo Salvini will lead the
country’s next government. Salvini has
been much more confrontational with the
E.U. over questions of Italy’s budget, and
even if the top job forces him to moderate
his tough talk, the fear of market- moving
political turmoil—inside Italy and be-
tween Italy and the E.U.—will intensify.
Finally, new Prime Minister Boris John-
son insists Britain will leave the European
Union by an Oct. 31 deadline with or with-
out a deal on the future U.K.-E.U. relation-
ship. His demands that the E.U. renegoti-
ate the Brexit deal continue to meet strong
resistance in Brussels, and indications that
he might answer a no- confidence move
against his government with a call for na-
tional elections after Oct. 31 have set teeth
(and markets) on edge.
A decade ago, world leaders managed
to cooperate their way out of danger dur-
ing the financial crisis. But in a world of
“my country first,” all this political fric-
tion will make that much harder. THE RISK REPORT
Volatile politics rattle
the global economy
By Ian Bremmer
Politically
motivated
fights are
under way
between
countries
that make
up half
the global
economyHE ALT H
What’s in
your water?
In the 1940s, the U.S.
began adding fluoride to
public water to prevent
tooth decay. Since then,
studies (some in animals)
have suggested that high
doses of fluoride could
cause serious side effects
like bone cancer and
cognitive impairment.
For a new study in JAMA
Pediatrics, researchers
measured fluoride levels
in urine samples of 512
expectant Canadian women
during each trimester. Their
children later took IQ tests
at age 3 or 4. After adjusting
for factors such as maternal
education and household
income, the researchers
found that higher fluoride
corresponded with lower
IQ scores, most strongly in
boys. The relationship was
not statistically significant
among girls.
Dr. Dimitri Christakis,
editor in chief of JAMA
Pediatrics, stresses
that this was a single,
observational study. “I’m
not advocating, on the
basis of this study, that we
should necessarily change
public policy,” he says, “but
I would minimize exposure
to fluoride” during an
individual pregnancy.
—Jamie Ducharme