Geopolitical Fragmentation: Swing States and the Risk of Western Sanctions

The Sovereign and Economic Risk Group (SERG) is part of the Risk Division, and is responsible for assessing, monitoring and managing sovereign, and country risk by understanding and analyzing the countries where the firm takes risk. Geopolitical and economic fragmentation is splitting the world along competing blocs (West vs. China), with non-aligned countries playing a growing (and risky) role. In addition, the United States is increasingly linking national security priorities with economic policy, bringing a set of new risks for markets and businesses. Goldman Sachs/SERG believes that friend-shoring, decoupling, and de-risking will all be stories that define the path of globalization for the foreseeable future. Therefore, Goldman Sachs/SERG asked the Capstone team identify the geopolitical alignment of key swing states to manage country risks emanating from potential further decoupling between the West and China.