IMD World Competitiveness Booklet 2023

Figure 1: Regional Consumer Price Index (CPI)

Regional Consumer Price Index (CPI) Regional Consumer Price Index (CPI) Regional Consumer Price Index (CPI) Regional Consumer Price Index (CPI)

10 12 14 16

10 12 14 16

10 12 14 16

10 12 14 16

0 2 4 6 8

0 2 4 6 8

0 2 4 6 8

0 2 4 6 8

2018

2019

2020

2021

2022

Western Europe 2018 2018

Eastern Europe 20 2020

Western Asia & Africa 2021 20 1 2022

2018

2019

2021

2019

2020

2022

2019

20 2

Ex-CIS & Central Asia Western Europe

Eastern Asia Eastern urope

Southern Asi a & The Paci fic Western Asia & Africa Western Asia & Africa

Western Europe

Western Asia & Africa

Western Europe

Eastern Europe

Eastern Europe

North Ameri ca Ex-CIS & Central Asia

Eastern Asia

Southern Asi a & The Paci fic

Ex-CIS & Central Asia

Eastern Asia

Southern Asi a & The Paci fic Southern Asi a & The Paci fi

Ex-CIS & Central Asia

Eastern Asia

North Ameri ca

North Ameri ca

North Ameri ca

surrounding geopolitical risk, not least given the various reactions from different countries and regions. The conflict has led to the tragic loss of human life and the displacement of millions of Ukrainians. From an economic perspective, the war has disrupted the allocation and pricing of energy resources and agricultural commodities, as both countries are signif icant global producers. Moreover, supply chains have once again felt the impact of geopolitical tensions, exacerbating those concerns outlined earlier regarding inflation. Figure 3 presents a five-year analysis of the average gasoline prices per region, using data from the IMD World Compet itiveness Center data set. The findings indicate a substantial increase in gasoline prices in Eastern and Western Europe, as well as Eastern Asia. These price fluctu ations are directly linked to geopolitical risk, as when there is political tension in

one part of the world, economic implica tions (higher prices for energy and food) arise in other parts of the world. The war in Ukraine has initiated a decoupling process between the United States and the European Union on the one hand, and Russia on the other. Additionally, a tense relationship between China and the United States in the Indo-Pacific region is feeding the growing geopolitical risks. Therefore, concerns over geopolitical risks are expected to remain at the forefront of political and business leaders’ minds. Geopolitical risks have far-reaching impli cations for globalization, impacting the interdependency of economies. The trade of goods and services, the flow of capital, and the movement of people and ideas are profoundly influenced by geopolitical tensions. That is, geopolitical risks influ ence the shape of globalization.

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