PIMCO’s investment process is designed to encourage new ideas and differing points of view. One way we do this is by inviting outside experts to share their insights and help us test our thinking. These experts include the members of our Global Advisory Board, a team of world-renowned macroeconomic thinkers and former policymakers. Chaired by former Chairman of the Federal Reserve Dr. Ben Bernanke, the Global Advisory Board meets several times a year and contributes to our economic forums.

IMCO’s Global Advisory Board, a team of world-renowned macroeconomic thinkers and former policymakers, recently met to discuss factors influencing the global economy and markets. Their insights constitute a valuable input into PIMCO’s investment process. The discussion below is distilled from their in-depth conversation.

Q: What are the geopolitical risks you worry most about?

A: Both state and nonstate actors are contributing to an international environment in which greater turbulence and fragility are becoming the norm.

Among states there is growing multipolarity: The U.S. is pulling back from global leadership in diplomacy, security and trade, with rising powers like China and Russia stepping into the void. New powers are emerging, particularly in the Middle East, where the U.S. pullback has enabled Iran and Russia to play a more active role, and with Turkey also considering its position.

North Korea remains a significant area of worry. Both China and the U.S. recognize they must find a diplomatic solution, but China has incentives to delay resolution, and Russia’s presence is complicating the situation. Brinksmanship increases the risk of miscalculation.

Nonstate actors add a layer of complexity: Notably, terror networks will continue to pose a threat and cyberattacks are becoming commonplace. In addition, weather (witness the violent 2017 hurricane season) and epidemics can have far-reaching effects that challenge the capacity of the international system to respond.