Price hikes and energy stoke risk of civil unrest
● The risk of civil unrest has spiked across the globe as developed countries and emerging markets grapple with spiralling inflation and upheaval worsened by Russia’s invasion of Ukraine, according to a report.
Of 198 countries tracked in the Civil Unrest Index, 101 showed mounting risk in the third quarter of 2022, according to research collected by intelligence firm Verisk Maplecroft. That is the biggest increase since the ranking was developed in 2016.
The potential for unrest is rising across Europe, which is bracing for a long winter of energy disruption because of the war in Ukraine, and the developing world, where price spikes on basic staples have triggered concern about a global food crisis.
The threat is set to grow over the coming months, researchers say.
Civil unrest, particularly in developed countries, could take the form of demonstrations and labour strikes, with the potential to tear at nations’ social fabric.
“These are significant events in terms of disrupting everyday life,” said Jimena Blanco, chief analyst for Verisk Maplecroft. In emerging markets, worst-case scenarios may involve “rioting, looting, even attempts to overthrow the government”, she said.
Global inflation is likely to linger for months, with no prospect of returning to pre-pandemic and Ukraine war levels, even if consumer price inflation is set to ease somewhat in the second half.
As for civil unrest, while Verisk researchers predicted an increase in risk in 2020, the jump shown by research has been “far worse” than initially forecast, the report says.
Inflation levels mean almost half of countries on the index are risk categorised as “high” or “extreme”.
The mounting potential for unrest is likely only to be addressed with a “significant reduction” in food and energy prices, the report shows. But weather is also a factor, particularly in Europe, where a cold heating season would worsen the continent’s energy crunch.
Wealthy countries such as Germany, where the prospect of energy shortages has played out in higher gas and electricity bills, and the spectre of rolling blackouts, show an uptick. Even Switzerland, where inflation is at a three-decade high, registered an increase, the research shows.
Hot spots among developing nations include Sri Lanka, where protests about fuel shortages and mismanagement toppled its government this year, as the country negotiates a bailout.
Algeria, where gas revenue has staved off spending cuts, showed the biggest potential for risk in the next six months, the researchers say.
Many countries that were able to prop up their economies through the pandemic are now struggling to maintain social spending. They include Egypt, Bolivia, the Philippines, Serbia and Zimbabwe. —
In emerging markets, worst-case scenarios may involve rioting, looting, even attempts to overthrow governments