Here is our list of the top 15 global uncertainties that could become breaking news any time soon and significantly affect our lives. Obviously some of these uncertainties are interlinked and one has to look at the 'connected risks' associated with each one. Like dominoes toppling, a single event can trigger a chain reaction.

1. Zimbabwe

It is now possible that President Mugabe makes way for Morgan Tsvangirai, and this sets a completely new agenda for the country and the region. The emphasis shifts overnight from despair to the energetic reconstruction of the Zimbabwean economy. Massive amounts of foreign aid and private sector investment pour in to bolster the victory of democracy in the end. The turnaround is much quicker than expected which strengthens South Africa's role as an important gateway into sub-Saharan Africa. One of the first acts of the MDC as the government is to peg a newly constituted Zimbabwean dollar to the rand. In contrast to global trends, the Zimbabwean stock market and property sector experience a boom, as the country becomes a model of a modern African economy. This scenario is no longer a fairy tale - it could be a breaking future.




2. Recession

The probability of our Hard Times scenario has risen sharply in the last few months following the sub-prime mortgage disaster in the US and the difficulties experienced by Northern Rock in the UK. A classic recession is defined as two quarters in a row of zero economic growth or less. If it is accompanied by a quantum leap in political tensions internationally, the world could tip into a full-scale depression of the kind not seen since the 1930s. We refer to this possibility as The Perfect Storm.




3. Nuclear Terrorism

This remains near the top of our list (as it was in our letter to George Bush). The formula is out there and so are the materials and the skills. Human ingenuity being what it is, you cannot discount the possibility of a nuclear weapon ending up in the wrong hands. The devastation it would cause would completely overshadow all terrorist incidents to date. Recent events in Pakistan, which is a nuclear-armed state, can only add to the risks of nuclear proliferation (and conflict with India).




4. Military Wars

Wars - other than the two World Wars - have not disrupted the world economy to any significant degree. However, they obviously disrupt the economies and lives of the citizens of the countries in which they are being fought. The most dangerous trouble spot remains the Middle East in that events there can spill over into global politics. Tensions over the Iranian nuclear programme are still exacerbating the situation, and may lead to a showdown scenario. Sadly, the human race has never lost its inclination for violence as a way of settling scores and probably never will.




5. Global Climate Change

The recent number and ferocity of extreme weather events the world over could be related to the heating up of the atmosphere and the greater energy contained therein. It will be interesting to see what 2008 brings. If the American Administration does change its mind on global warming, watch out for a battle between the West on the one hand and China and India on the other as to who should pay for the cost of reducing carbon emissions. It is ironic that just as the two most populous nations on Earth are going through an industrial revolution, the atmosphere may become a limiting factor. Bali showed that there is still a long way to go before significant action is taken.




6. Water Shortages

The three countries which are currently experiencing water shortages are Australia, Spain and surprisingly the UK. Is it related to climate change? No one knows for sure. The economics of water, particularly where rivers flow through different countries, is already a hot issue and could become more so in 2008.




7. Carbon Labelling

The Bali deadline to negotiate new rules of the game for carbon emissions is the end of 2009. Meanwhile, supermarket chains may be put under pressure to quote the carbon chains of the individual goods on their shelves i.e the total amount of carbon emissions in their manufacture and delivery. Tesco has already started the trend by labelling 30 products.




8. Higher Energy and Food Prices

Recently the oil price went through $100 a barrel. The prospect of oil prices entering a significantly higher band (say $70 - $200) is real as demand from China and other developing economies outstrips new supplies. This (together with global warming) could create a major impetus towards alternative energy sources (uranium, fuel cells etc) as well as initiate a gradual change in our living patterns, which have been based on cheap energy for the last 145 years.

At the same time, food prices have escalated by up to 50% over the last 12 months. This is due to a combination of factors: adverse weather patterns; the green revolution running into the law of diminishing returns; an increase in demand for food (and a more diverse diet) in places like China; and the conversion of farmland to the production of ethanol for fuel purposes.




9. Trade Wars

China's incredible success in penetrating overseas markets (and thereby closing down/taking over foreign industries) could lead to a major backlash from the West and other countries. As long as the backlash takes the form of negotiated compromises between the parties concerned, the fruits of globalisation can continue to be enjoyed. If, however, things turn nasty, a major deterioration in world economic growth caused by renewed protectionism is possible. This would deepen any recession.




10. Unsustainable US Debt and Deficits

The magnitude of the US budget and trade deficits has for some time been worrying. More worrying, though, is the level of US debt (government, corporate, consumer), which has breached $48 trillion or nearly 4 times GDP. How long can one go on spending what one does not actually possess or earn? The US Federal Reserve Bank has responded to the credit crunch by lowering interest rates; but the room to ease rates further could be limited by the rise in the inflation rate caused by more expensive energy and food. A major bank insolvency is not out of the question, despite massive infusions of cash by central banks. The consequences of irresponsible lending have yet to play out in their entirety.




11. Global Epidemics

We already have one global epidemic - HIV/AIDS - the extent of which is uncertain. The question is whether it will be joined by another epidemic such as avian flu, which could have a much greater impact in the short-term.




12. African Sunrise

Despite all the bad news that has been coming out of the Continent (Kenya being the latest example), Africa is definitely open for business in a way that it wasn't say 20 years ago. In selected countries, governments are improving service delivery and are creating a more favourable environment for foreign investment. Old ideologies have been shed and Africa's great talent for entrepreneurship is going to contribute to one of the big 'positive' surprises in the first decade of the new century.




13. Infrastructural Shocks

Around the world, infrastructure is aging, whether we are talking about power grids, railways, bridges, roads, ports and even airports. If the world economy outstrips expectations, it could be checked by infrastructural capacity simply not keeping up with the growth in demand. Power cuts in major cities are now becoming a common occurrence. Alas, the latest country to suffer this type of shock is South Africa.




14. Gold Price

Given the degree of volatility in the world's major currencies and stock markets, the gold price could hit $1 000 an ounce in 2008. This is no longer a breaking future because it did just that. The question is whether it will now move permanently into a $1000 - $2000 range based on the weakness of the dollar.




15. East owns West

The pattern of ownership of assets in Western countries is changing. Both the Middle East and China are flush with cash and are buying equity stakes in Western companies whenever the opportunity arises. Should a recession hit the West and stock markets fall further, the trend could intensify.