For this week’s newsletter, we examine some of the less-discussed conflicts in the world, as well as political, technological, and economic developments that mark our new era of transition. First, we look at some of the conflicts in the Global South that get less focus than the ones in Ukraine or Gaza. Then, we examine the upcoming election in India with Prime Minister Modi’s record in mind. We then shift to developments in the world of tech, highlighting the growth of semiconductor firms, corporate interest in artificial intelligence (AI), and governmental concerns about the use of AI. To end this week, we look at the changes in the global economy that underline the new age in which we live.

The Unseen Conflicts of the Global South

War comes to Sudan’s capital — at vast human cost

Zeinab Mohammed Salih, Financial Times

The gangster named ‘Barbecue’ who controls Haiti’s violent slums

Joe Daniels, Financial Times

Threat of regional war intensifies as DR Congo rebels close in on Goma

Gioia Shah, Financial Times

With the world’s eyes on the conflicts in Ukraine and Gaza, other, even more violent conflicts get less attention. One in particular is Sudan’s civil war, which has reached a new brutal level. The military and Rapid Support Force (RSF) paramilitary forces have returned to bloody fighting in the capital and surrounding areas. Millions have fled their homes, and the UN considers Sudan conflict the world’s worst humanitarian crisis with over 25 million people in need of aid. Both sides are accused of war crimes against civilians. The recent army offensive near the capital, Khartoum, has pushed back rebels who have defended the territory street-by-street, but it has not secured victory. Despite the army’s momentum, experts have said neither side seems strong enough to decisively defeat the other anytime soon. In central Africa, the fight between M23 rebels and the Democratic Republic of the Congo’s government forces in the country’s east is intensifying, threatening to engulf Goma, the capital of North Kivu province, in a humanitarian crisis. The M23 rebels, allegedly backed by Rwanda, are close to encircling the city, causing food and basic necessities to become scarce as hundreds of thousands of people flee to the city for safety. The UN and aid agencies are deeply concerned about the potential for a wider regional war and the escalating violence that has already displaced millions and wounded hundreds.

There is conflict across the Atlantic, as well. After the political crisis sparked by the death of Haitian President Jovenel Moïse in 2021, violent gangs now rule the large majority of Port-au-Prince, extorting businesses, kidnapping residents, and fighting for turf. The country’s police, only 9,000 strong, can’t stop them. This violence has displaced around 15,000 people, worsened food shortages, and caused Haitians to flee to the US border. The United States has called for an “expedited transition” in Haiti while Haitian Prime Minister Ariel Henry has resigned after the anarchy prevented his return to the country. A number of Caribbean leaders organized a council of Haitian groups and political parties to submit names for a transitional presidential council, but it is unclear how or when the violence in the capital can be turned down.

Modi’s Reelection Prospects Brighten as India’s GDP Surges but Challenges Loom 

India’s ‘glittering’ economy lights Modi’s reelection path.

Kiran Sharma, Nikkei Asia

To see India’s future, go south

The Economist

Ten charts reveal Narendra Modi’s actual record in office

The Economist 

India’s GDP surged by 8.4% in the last quarter of 2023, surpassing expectations and solidifying its position as the fastest-growing economy among major G20 nations. Projections suggest this growth will maintain a robust pace over the medium term, potentially propelling India’s GDP to $5 trillion within the next four years. This economic upswing is viewed as a significant advantage for Prime Minister Modi’s reelection campaign. However, analysts caution that the actual growth might not be as robust as the headline figures suggest, pointing to subdued private consumption and investment. Furthermore, Modi’s overall performance presents a mixed picture. Despite achievements in poverty reduction and welfare spending, GDP per capita growth has slowed compared to his predecessor Manmohan Singh. Unemployment rates, especially among youth, have remained stagnant, and rural wages have not seen substantial growth due to weak economic conditions in rural areas. Modi has notably increased infrastructure spending, particularly in transport and digital infrastructure, and has embraced clean energy with ambitious targets for renewable energy by 2030. Nevertheless, India continues to grapple with pollution, particularly in urban areas, and faces challenges in education, with poor learning outcomes despite high enrollment rates.

In addition, there are concerns about the growing economic divide between the north and south. Despite containing only 20% of the population, India’s southern states account for 30% of loans and 35% of foreign investment flows in the past three years. They are seen as economic powerhouses, attracting global supply chains. However, the Hindu identity politics of the ruling party – the BJP – do not align with the region’s political landscape, leading to less BJP success there. Resolving these geographical tensions is crucial for India’s continued growth. Some pessimists fear that a re-elected Modi could upset the constitutional balance, potentially leading to calls for India’s breakup. However, an alternative future could involve the BJP moderating its Hindutva message, a shift that may already be underway within the party’s southern leadership.

TSMC’s Growth, Apple’s AI Ventures, and Global Efforts for AI Safety

AI’s Rise is Unstoppable Whatever Government Leaders Do

Alan Crawford, Bloomberg

Chinese and western scientists identify ‘red lines’ on AI risks

Christina Criddle and Eleanor Olcott, Financial Times

Taiwan Semiconductor Manufacturing Co. (TSMC) is poised for a significant uptick in growth in 2024, fueled by the burgeoning demand for AI technologies. Despite efforts by the US and others to shift production of strategic technologies away from Asia, TSMC’s stock price is soaring, drawing considerable foreign investor interest. This optimism stems from TSMC’s role as a leading chipmaker for AI applications while the company is expanding its footprint with new plants in Arizona, Japan, and Germany. However, this strategy could be risky due to escalating tensions between Taiwan and China, raising concerns about supply chain disruptions. 

In parallel, the AI landscape is witnessing pivotal developments, with Apple in discussions with Google to license the latter’s Gemini AI engine for innovative iPhone features. This potential collaboration could pave the way for widespread adoption of generative AI in consumer products. Yet, scrutiny looms over Apple’s existing agreement with Google for its search engine on the iPhone, reflecting broader concerns about the tech giant’s influence. Amid these advancements, prominent AI scientists from the West and China are advocating for global cooperation to address AI related risks, likening it to the collaborative efforts during the Cold War to prevent nuclear conflict. Recent dialogues in Beijing have underscored the importance of establishing “red lines” for AI development, focusing on preventing the creation of bioweapons, cyber-attacks, and ensuring human control over AI systems to avert catastrophic risks to humanity.

Is the Global Economy Undergoing a Seismic Shift?

Stock markets undergo ‘risk reset’ as indices notch new records

Jennifer Hughes & George Steer, Financial Times

Gold’s mystery rally baffles analysts

Harry Dempsey & Mary McDougall, Financial Times

Powell’s Silence Frustrates Markets as Post-Covid Economy Shifts

Craig Torres, Bloomberg

Stock markets around the world are hitting record highs on growing optimism about the global economy and strong corporate earnings. Analysts are revising their forecasts upwards, with some predicting a “risk reset” as central banks appear to be taming inflation without causing a recession. This rally is fueled by hopes of a soft landing for the US economy, with strong earnings growth across various sectors despite rising borrowing costs. However, some analysts warn that the rally might be frothy due to factors like record prices of bitcoin and gold, and relatively high stock valuations despite strong earnings. While bitcoin has recently hit highs after billions have poured into crypto ETFs since they launched in the US two months ago, the recent surge in gold prices – over $2,100 per troy ounce – has experts puzzled. Many analysts say that the rally can’t be explained by the usual factors like interest rate cuts. Some analysts suspect big hedge funds might be behind the surge, but there’s no clear evidence. While some fear a correction is coming, others believe the strong demand from certain regions, gold’s resilience to contradictory data, and investors’ hedging against unknown risks such as a banking crisis or geopolitical conflicts suggest a solid base for the price.

Nevertheless, many believe that the global economy has entered a new age, post-Covid. In the US, for example, consumers are on a spending spree, seemingly unshaken by higher borrowing costs. Businesses are also stocking up on supplies more than usual, suggesting they’re anticipating continued strong demand. This “new normal” could potentially mean a higher baseline for inflation, requiring the Fed to keep interest rates elevated for a longer time than anticipated, far different from the near-zero interest rate period some called the “Great Moderation.” The European Central Bank has openly acknowledged potential long-term shifts in the global economy, highlighting changes in the labor market, energy markets, and geopolitical realignment as potential turning points. In this new age, policymakers face a big challenge: deciphering the post-pandemic economic landscape and its implications for interest rates, inflation, and ultimately, the way the world works.