Over 3.2 million people have been killed by COVID-19 since December 2019.
Since the last issue of the Willis Towers Watson Political Risk Index last year, the impacts of COVID-19 have continued to reshape global politics and economics. Over 3.2 million people have been killed by COVID-19 since December 2019, when the World Health Organization first recorded the disease, and the number of infections has exceeded 153 million. Yet in practice these figures are likely to be far higher, given the uneven virus testing and treatment capacity globally and because many infected do not show symptoms.
In this edition of the Willis Towers Watson Political Risk Index – and for the subsequent editions – we have changed the underlying dataset from which the numerical risk rating scores are developed.
We have also used this issue of the Index to introduce 24 new countries and territories
We have also used this issue of the Index to introduce 24 new countries and territories, while retaining 36 countries from the previous report in mid-2020, for a total set of 61 countries and territories covered. This expansion will increase specific coverage of individual countries and regions, and at the same time allows for a wide regional picture to be established by readers.
Emergence of massed vaccination programmes offers the hope eventually of returning to ‘normal’ once a critical mass of the global population has been vaccinated. However, problems and uncertainties remain. Countries have had to turn to raising additional debt on capital markets to fund the shutting down of large parts of their economies and making maintenance payments to the millions of people who have been made unemployed or who have been furloughed due to social and business lockdowns, intended to slow the virus’s spread.
Looking further ahead, some countries, particularly emerging markets (EMs), will face pressure to manage these pandemic-related debt burdens. One way of managing the increase in debt is to raise taxes and limit or delay state investment initiatives. However, that raises the risk of strangling the much-needed economic recovery, and triggering social unrest. One of the economic variables that correlates most strongly with both mass protests and violent riots is ‘austerity’, i.e., cuts in government budgets or increases in taxes. Two pre-pandemic examples are the gilets jaunes movement in France, the onset of which was associated with an increase in fuel taxes, and the riots that swept Chile starting in 2019, associated with, in effect, a reduction in subsidy for public transport in Santiago.
One of the economic variables that correlates most strongly with both mass protests and violent riots is ‘austerity’, i.e., cuts in government budgets or increases in taxes.
As lockdown measures are eased and geopolitics refocuses on issues other than COVID-19, changes to sanctions regimes can be expected, whether ‘positively’ with their removal, or ‘negatively’. Examples arising from this issue of the Index include Myanmar and China. In both cases, human rights concerns could lead to a greater use of sanctions, as the international community seeks to tip the scales to its preferred outcomes. Another example featured in this report is Iran, in that case, the US government is considering the removal of sanctions on the country, to encourage Tehran to return to the 2015 Iran nuclear deal.
To read more, please go to the full Political Risk Index, accessible below.
Sam Wilkin is WTW's director of political risk analytics, meaning he constantly monitors emerging and existing politically-linked threats to companies. He also leads WTW's annual political risk survey.