Increased Geopolitical Risk for Business.                                                                                          In 2019. China's imperative to catch up in critical areas like aerospace and high-end semiconductor development will only increase cyberthreats to corporations and compel an overall more offensive U.S. policy in cyberspace. In addition, corporations will have to contend with supply chain disruptions and heavier fines and lawsuits for data breaches. Measuring Trade Volatility in the Global Economy. A U.S. showdown with the World Trade Organization could paralyze the body's dispute settlement process, forcing countries into a less predictable bilateral track to resolve their trade differences. Canada, Mexico, Japan and South Korea have a better chance of negotiating quotas to mitigate the threat of U.S. auto tariffs, but the European Union's trade talks with the United States are doomed to fail. And while additional U.S. tariffs on China will add to trade uncertainty, the overall effect on the global economy from White House trade policy in 2019 will be relatively muted.            Hair-Raising Scenarios for Italy and Brexit. A defiantly populist Italian government will pose the biggest threat to the eurozone in 2019 as concerns grow over the country's rising debt levels and fragile banking sector. Financial markets and dangerously wide spreads in bond yields — rather than threats from Brussels — will prove to be Rome's biggest disciplinarians. Brussels will simultaneously work to avert a no-deal Brexit scenario with the United Kingdom, but a British parliamentary veto remains the single biggest obstacle to its orderly exit from the European Union.The Next Steps in the Anti-Iran Campaign. With far-reaching secondary sanctions in place, the United States will forge ahead with its campaign to isolate Iran regionally and weaken the country from within. This will increase friction between Washington and Tehran and diminish the already scant likelihood of a constructive negotiation. A common agenda opposing Iran will help insulate strategic, high-level ties between the United States and Saudi Arabia despite rumblings within the royal family and foreign governments over Saudi Crown Prince Mohammed bin Salman's leadership. An Eye on Growing Supply in Global Energy Markets. Saudi Arabia and Russia will carefully manage oil output to prevent a price plunge as they monitor the effects of residual Iranian exports on the market. There is also the potential for production growth out of Iraq and Libya and a significant easing of export capacity constraints on the United States later in the year. Global liquified natural gas markets will be shaken up when the United States assumes its place among the top three LNG exporters in the world in 2019.Disruptive Forces at Work in the Americas. Hard-line and U.S.-aligned governments in Brazil and Colombia could drive an atypically proactive regional effort to contain spillover from Venezuela's ongoing crisis. Brazil's efforts to shake up and reform the Mercosur trading bloc will come up against a politically hamstrung Argentina. The power of the referendum will meanwhile be put to the test in Mexico, where an aggressive populist agenda will raise investor risk.Ethiopia Drives Big Change in the Horn of Africa. Ethiopia's ambitious agenda is generating economic interest and attracting outside powers to the Horn of Africa. But internal challenges to the current leadership and ethnic strife risk slowing Addis Ababa's momentum. The United States, China and Russia would emerge as the defining feature of the international system, creating a conundrum for the middle powers caught in the throes of great power rivalry. It didn’t take long for trade wars, cyberattacks, shifting defense strategies and arms races to convince the world that this is the new and uncomfortable global reality.Great power competition is set to only intensify in 2019. The White House will double down on its attempts to short-circuit China’s advances across a number of strategic fields. Beijing will take some blows along the way, but China still has the means and more motivation than ever to accelerate its timetable and efforts toward reaching parity with the United States. And while there is no love lost between China and Russia, the potential for a tighter alignment in 2019 is likely to overcome the friction points in their uneasy partnership.This new global dynamic creates a massive headache for middle powers and globally exposed businesses attempting to navigate an increasingly complex landscape. The year will expose the limits the United States faces in trying to isolate China both from within tightly interwoven supply chains and from even the most dependable U.S. allies, caught between maintaining a tight security relationship with the United States and a growing need to expand their economic ties with China. This global dynamic will create a massive headache for middle powers and globally exposed businesses trying to navigate this complex landscape. Even as major European powers try to assert EU sovereignty on the global scale to avoid becoming collateral damage, they will remain largely reactive to the broader competition. And for those powers lying along the borderlands, from Poland to Turkey to Taiwan, a tenser geopolitical climate will translate in some cases into strategic opportunities as they try to work quickly to shore up security alliances and extract special economic benefits from powerful suitors.Timing is key: 2019 marks the rollout of revolutionary fifth-generation telecommunications technology in the developed world..The next two years will bring a game-changing level of speed and connectivity to underpin transformative technologies, like the "internet of things," virtual and augmented reality, artificial intelligence processing, autonomous vehicles, and telemedicine — which are already areas of intense U.S.-Chinese competition. And since Huawei and ZTE are two among a small handful of technology companies that have developed the technological infrastructure and standards around 5G, the U.S. government will do whatever it can to prevent its biggest strategic competitor from embedding itself deep inside the economic nervous systems of itself and its allies. That growing imperative will naturally add fuel to an already building fire between the state and the corporation in several advanced economies as multinational tech firms with deeply layered supply chains try to resist a rise in regulatory handicaps to business models that rely on open trade and cross-border data flows.Any kind of global consensus on the priorities and methods needed to govern cyberspace will remain elusive in 2019.Intensifying great power competition in cyberspace will only aggravate state-corporate friction over policy. As the biggest target of cyberattacks, the United States is moving down a more offensive path, with China and Russia squarely in its sights. (The lead-up to the 2020 U.S. presidential race will draw additional attention to the cyberthreat posed by China, in particular.) A growing trend can be seen in Western countries where governments will rely on heavy fines and the buildup of consumer lawsuits to hold corporations accountable for large-scale data breaches. Calls among major powers to develop global norms for cyberspace will grow more urgent, but consensus and enforcement for any such agenda will remain elusive given widely divergent positions among the United States, Europe, Russia and China over the priorities and methods needed to govern cyberspace.Slow and Steady as She Goes for the Global Economy.When we step back and look at all the factors likely to drive instability in the global economy in 2019, there is cause for concern, but not necessarily panic. Growing levels of corporate and sovereign debt, slow growth in workers' incomes, demographic stresses and building political constraints to structural reform make a troubling backdrop to the longer-term economic outlook. Nonetheless, the biggest threat to the U.S. economy from White House trade policy — the collapse of NAFTA — has been mitigated. The potential for more U.S. tariffs on Chinese imports and on U.S. auto imports from outside North America will create localized, sectoral pains but will have a limited impact on the U.S. economy and global economy at large. The White House will point to stable U.S. economic growth to justify an aggressive approach on trade, though the stimulant effects of U.S. tax cuts and fiscal spending will wane in the next few months and keep U.S. monetary tightening on a relatively moderate course.