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The Impact of Geopolitical Tensions on the Global Economy and the Risk of a Recession.

The Impact of Geopolitical Tensions on the Global Economy and the Risk of a Recession​

What are Geopolitical Tensions?


What are Geopolitical Tensions

Geopolitical tensions refer to political and economic issues between different countries or regions, which can cause instability in the global economy. 

Factors such as trade policies, sanctions, and military conflicts can all contribute to geopolitical tensions. These factors significantly impact financial markets and can trigger a recession. 

Let us start by understanding how geopolitical tensions influence the global economic landscape.

How Can Geopolitical Tensions Influence The Global Economic Landscape?


How Can Geopolitical Tensions Influence The Global Economic Landscape?


Geopolitical tensions can significantly impact the global economic landscape, creating uncertainty and volatility in financial markets. 

Geopolitical risks can lead to disruptions in trade and investment, which can, in turn, lead to slower economic growth and even recession.

For example, trade disputes and economic sanctions can limit access to markets, reduce business investment, and increase production costs, all of which can negatively impact global economic growth. Military conflicts or other security risks can also disrupt supply chains and cause market disruptions.

Geopolitical tensions can create a “risk-off” sentiment among investors, who may become more cautious and seek safer assets, such as government bonds. This can lead to reduced capital flows to emerging markets, making it more difficult for those countries to finance economic growth.

Next, let us discuss the factors that contribute to these.

Factors that Contribute to Geopolitical Tensions


Factors that Contribute to Geopolitical Tensions


Geopolitical tensions can arise from various factors, including economic, political, and security issues. Here are some of the critical factors:

  1. Trade Risks- Trade disputes, economic sanctions, and other economic issues can lead to tensions between countries. For example, the ongoing trade war between the United States and China has contributed to rising tensions and uncertainty in the global economy. It has the potential to trigger an economic recession in 2023.
  2. Territorial Disputes- Conflicts over land and resources can create tensions between neighboring countries. For example, the ongoing territorial dispute between China and Japan over the Senkaku/Diaoyu Islands has increased tensions and a potential military conflict.
  3. Military Conflicts- Wars and other military conflicts can lead to instability and tension in the global economy. For example, the Russia-Ukraine War or the ongoing conflict in Syria has created a refugee crisis and has disrupted global oil markets, contributing to market volatility and uncertainty.
  4. Political Issues- Political disagreements and conflicts between countries can contribute to geopolitical tensions. For example, disputes over human rights, democracy, and other political issues can lead to economic sanctions and other forms of conflict.

Next, let’s look at some historical events where geopolitical tensions impacted the global economy. 


Historical Events Where Geopolitical Tensions Impacted Global Economy

There have been several historical events where geopolitical tensions have had a significant impact on the global economy. Here are some examples:

  1. Cold War- The Cold War between the United States and the Soviet Union, which lasted from the end of World War II to the early 1990s, created significant geopolitical risk and instability. The arms race and other conflicts between the two superpowers contributed to global instability and created the potential for a catastrophic nuclear war.
  2. Oil Crises- In the 1970s, geopolitical tensions in the Middle East led to two major oil crises in which oil prices spiked and caused significant economic disruptions. The Arab-Israeli War caused the first crisis, while the Iranian Revolution caused the second.
  3. 2008 Financial Crisis- The 2008 global financial crisis was partially triggered by geopolitical risk, particularly the collapse of the housing market in the United States. The crisis also exposed weaknesses in the global financial system and led to a significant economic recession.
  4. US-China Trade War- The ongoing trade war between the United States and China began in 2018 and has created significant geopolitical risk and uncertainty. The trade tensions have led to disruptions in global supply chains, reduced business investment, and potential global economic recession.

These historical events demonstrate how geopolitical tensions can significantly impact the global economy, including economic recession and trade risks

Now, let us discuss key economic indicators to identify the risk of a recession.

Key Economic Indicators to Identify the Risk of A Recession Due to Geopolitical Tensions


Key Economic Indicators to Identify the Risk of A Recession Due to Geopolitical Tensions


Geopolitical tensions can create significant risks and uncertainties for the global economy and potentially lead to an economic recession. Here are some key economic indicators that can help identify the risk of a recession:

  1. Global Trade- A decline in global trade volumes can signal to weaken economic activity and indicate that geopolitical tensions negatively impact the global economy. Investors and businesses should keep an eye on global trade data and trends, particularly in critical sectors such as manufacturing and energy.
  2. Currency Fluctuations- Currency markets can be sensitive to geopolitical risk, and fluctuations in exchange rates can signal uncertainty and risk. Investors should monitor currency markets for signs of instability, like emerging markets or countries with significant geopolitical risks.
  3. Commodity Prices- Geopolitical tensions can impact the prices of essential commodities such as oil and metals, which can significantly impact the global economy. A sustained increase in commodity prices can indicate risks to global economic stability and may lead to an economic recession.
  4. Stock Market Volatility- Geopolitical tensions can lead to stock market volatility as investors react to news and events. A sustained period of stock market volatility can indicate that geopolitical risk contributes to market uncertainty and the potential for an economic recession.

Now, you have seen what are the signs that indicate the risk of recession. Next, let us discuss some measures that governments & central banks can take to mitigate the geopolitical tension’s impacts. 

Measures Governments & Central Banks Can Take to Mitigate Geopolitical Tensions' Impacts


Measures Governments & Central Banks Can Take to Mitigate Geopolitical Tensions’ Impacts


Geopolitical tensions can significantly impact the global economy and potentially lead to a global recession. Governments and central banks can take several measures to mitigate the impact of geopolitical risks on the economy, including:

  1. Trade Agreements- Governments can work towards resolving trade disputes through negotiations and agreements to reduce trade risks and restore market confidence. Tariff reductions and free trade agreements can also help stimulate economic growth and reduce the risk of a global recession.
  2. Fiscal Stimulus- Governments can provide fiscal stimulus measures such as tax cuts and infrastructure spending to boost economic growth and reduce the impact of geopolitical risks on the economy. This can include measures to support domestic industries and encourage investment.
  3. Monetary Policy- Central banks can use monetary policy tools such as interest rate cuts and quantitative easing to stimulate economic growth and support financial stability. This can help to reduce the risk of a global recession in 2023 and manage the impact of geopolitical risks on the financial system.
  4. Risk Management- Governments and central banks can establish risk management frameworks to monitor and manage geopolitical risks, including the potential impact on financial markets and the economy. This can involve stress testing financial systems to identify vulnerabilities and developing contingency plans to address potential risks.

So, these are some steps central institutions can take to mitigate the impact of geopolitical tensions & geopolitical risks.

The Bottom Line


Geopolitical tensions can significantly impact the global economy and may contribute to a potential global 2023 recession. Businesses and investors should monitor key economic indicators and implement risk management strategies to mitigate the impact of geopolitical risks on their operations. 

Meanwhile, governments and central banks can work towards resolving trade disputes and implement fiscal and monetary policies to support economic growth and financial stability. Effective risk management and international cooperation can help reduce the global recession risk and promote economic stability in the face of geopolitical risks.

Frequently Asked Questions - Secvolt


Frequently Asked Questions

  • How does geopolitics affect the economy?

Geopolitics affects the economy by creating geopolitical risks, such as trade conflicts and military tensions, which can disrupt markets, reduce business confidence, and increase uncertainty. This could lead to economic recession, as seen in historical events such as the 2008 global financial crisis.

  • What are the major causes of global recession?

The major causes of a global recession in 2023 can include factors such as financial crises, economic imbalances, and geopolitical risks. These can lead to a decline in economic activity, reduced investment, and decreased consumer spending. The 2023 recession is predicted to be driven by a combination of factors, including geopolitical tensions, slow global growth, and supply chain disruptions.

  • What is the impact of global recession?

The impact of a global recession can be severe, including job losses, decreased investment, and reduced consumer spending. Economic growth can slow down, and the effects can be felt across different sectors and countries, leading to widespread financial hardship. It can take years to recover from an economic recession, and countries may need to implement significant policy measures to support economic recovery.

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!