Diplomats- guarded outlook for 2013

Envoys are cautiously optimistic about 2013 but warn in the Embassy New Year survey  that the positive global outlook remains fragile.

Half the respondents in the survey  were either “optimistic” or “cautiously optimistic” about the global outlook, while a further 17 per cent were “neutral” or on the fence about global prospects in the coming year.

The main reasons for the guardedly upbeat mood included the EU getting to grips with the eurozone crisis, the re-election of Barack Obama and the resilience of the US, and a clutch of stable governments and growth prospects in Africa, Asia and Latin America.

The BRICS countries, and Brazil’s prospects for growth and stabilising influence in Latin America in particular, were the source of most optimism among diplomats. China however, is seen as an opportunity and a threat, with worries about an economic slowdown and tensions in the South China Sea.

The remaining third of respondents were pessimistic and those who were “realistic” or cautiously optimistic warned that optimism was weak and could fade in the face of shocks.

Infighting among EU member states; recalcitrant politics in the US regarding the ‘fiscal cliff’ and debt ceiling which could cause a slide in the value of the dollar; and negative “spillovers” of the Arab Spring were also cited as threats that could scupper good prospects. 

Asked to rate their own regions, diplomats from Africa, Asia and the Americas seemed, on the whole, to be the most upbeat. Envoys from the EU were divided, with some sensing that the eurozone was making progress while others felt it was “not yet out of the woods”.

In the Middle East, envoys were pessimistic, largely due to the ongoing war in Syria, the uncertainty over elections in Iran and the lack of progress in the Middle East Peace Process.

Asked to list the major global threats to peace and prosperity, most envoys were concerned about instability in the Middle East and North Africa, which could have multiple negative consequences, notably an increase in the threat of terrorism and a decrease in energy security, particularly the impact of oil price hikes on the world economy.

Another eurozone meltdown was also seen as a threat to global prosperity, while in the long-term, failure to tackle climate change would also become a problem, envoys said.