Economy

‘Powder kegs waiting for a spark’: rising costs threaten global unrest, say risk analysts | Global development

Rising costs of food and energy and the impact of the climate crisis on resources are predicted to increase civil unrest in more than half the world’s countries over the coming months, according to new analysis.

This year has already witnessed large-scale protests as inflation levels soar in Argentina, Ecuador and Sri Lanka, but the worst is yet to come, said risk intelligence company Verisk Maplecroft.

With more than 80% of countries around the world seeing inflation above 6%, socioeconomic risks are reaching critical levels, it said.

“We’re talking about numerous powder kegs around the world simply waiting for that spark to be ignited. We don’t know where that spark will come first,” said Jimena Blanco, the company’s chief analyst.

Analysis published by the company on Friday said 101 out of 198 countries, including the UK and across Europe, now had a heightened risk of conflict and instability.

Only a significant reduction in global food and energy prices can stop the trend of growing civil unrest, it said.

“We’ve seen a lot of big protests around the world this year and we’re seeing inflation accelerating,” said Torbjorn Soltvedt, Verisk’s principal Middle East and north Africa analyst, who led the research. “In parallel, we’ve seen a trend of a weakening of democratic countries and of free speech. That’s why we expect a lot more civil unrest this year and going into next year.”

Counties across Europe face some of the biggest risks of unrest, fuelled by Russia’s invasion of Ukraine.

Protestors gather in front of the presidential palace and the Economy Ministry in Buenos Aires on 10 August demanding better wages, more jobs and a meeting with Argentina's new economy minister Sergio Massa.
Protestors gather in Buenos Aires on 10 August demanding better wages, more jobs and a meeting with Argentina’s new economy minister Sergio Massa. Photograph: Luis Robayo/AFP/Getty Images

“The situation is so bad in places like Haiti, Myanmar and Sudan that it is hard for them to become much worse. Therefore, countries in Europe that have to date enjoyed much more stable environments are likely to see bigger increases in risk,” said Blanco.

The risk of civil unrest has increased in Ukraine because it is harder to voice discontent under martial law, said Verisk. Since the beginning of the Russian invasion, anyone protesting can be arrested. Even after the conflict ends, “the challenges to rebuild the economy, infrastructure, and bring back civil life to prewar standards, will provide fertile ground for protests,” said Blanco.

Countries such as Egypt, the Philippines and Zimbabwe that were able to offer support to people during the Covid-19 pandemic are now struggling to maintain levels of social spending, which could cause discontent, said Verisk.

Blanco said political events in Latin America “may feed into drivers of unrest”.

Chile is preparing to vote on a new constitution, she said, and Brazil is heading into a polarised general election. “In Argentina the government is effectively collapsing amid ongoing unrest,” she added. “The question is whether the unrest will escalate into something more profound.”

For governments unable to spend their way out of crises, repression is likely to be the main response to anti-government protests. People in Iran – alongside other countries in the Middle East – are already subject to violence from security services, the research found.

Weather is likely to be a determining factor in whether unrest increases. A cold autumn and winter in Europe could worsen an already serious energy and cost of living crisis. An increase in droughts and water stress globally may worsen already high food prices and spark protests in affected areas.

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