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The Political Risk Index – Spring 2020

Analysing trends and patterns seen over the last quarter in the world’s most vulnerable countries

Credit, Political Risk and Terrorism
COVID 19 Coronavirus

By Paul L. Davidson | May 29, 2020

The impact of the coronavirus (COVID-19) has had huge impacts to countries across the world.

In the last quarter, at least half of the world’s population has experienced lockdown in an attempt to stop the spread of COVID-19. It’s an unprecedented public health emergency that has claimed thousands of lives and sparked fears of the worst global recession since the Great Depression.

This edition of the Political Risk Index looks at how the forty countries in the Index are facing the economic and social disruption of the COVID-19 pandemic and the political implications of measures taken to limit its spread, together with falling government revenues and a fragile currency.

The need for spending public money now is pushing up levels of debt that are already draining the economy.

In many cases, the need for spending public money now is pushing up levels of debt that are already draining the economy. Close to half of the Index countries are oil producers, for whom the virus-related global slowdown has resulted in a drastically reduced oil price that is cutting deeply into expected revenues. The longer-term impacts for each country on the relationship between the public and private sectors, on existing tensions in the political system, on growth and currencies, and on sovereign debt, will be profound.

While the policy response to the pandemic in many developed countries has involved locking down the whole population and using stimulus packages to minimise bankruptcies and protect jobs, this is not always an option for countries in the Index. Instead, many face the danger of a vicious circle in which an inability to enforce or finance social distancing requirements to slow the spread of the virus results in a collapse of underfunded health systems and new levels of social discontent that strain the political system.

Download our Index, in collaboration with Oxford Analytica, for a full in-depth view of each country detailing the risks that they hold at the moment.

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