There is no stability. More uncertainties

Marsh Insurance Company has compiled a political risk map of the world for 2019. Russia found itself in the group of countries with moderate risk of instability – at the level of such countries as China, India, Romania or Saudi Arabia. Experts analyzed the geopolitical risks, as well as risks from the economic policies of a particular country. The minimum risks of instability are defined for Canada, Sweden, Norway and Switzerland. Maximum – for the majority of African countries and such countries as Iraq, Iran, Pakistan, Afghanistan, Turkmenistan, Tajikistan, Kyrgyzstan, Venezuela and Bolivia. Insurers noted that the risks of geopolitical instability in general increased in 2019, which may adversely affect the conduct of business.

The Political Risk Map-2019 was compiled by experts from Marsh, a company specializing in insurance and risk management. The degree of risk by country (scale from 0 to 100, where 0 means maximum risk of instability, and 100 means minimum) is calculated on the basis of data from Fitch Solutions, a risk assessment company that is part of Fitch Ratings. In a report accompanying the map, Marsh analysts note that “business and trade are increasingly exposed to the risks of growing uncertainty in all countries, from developing to developed”. The reasons for the growing instability in 2019, researchers call the continuing friction between the United States and China, trade wars, Brexit, political changes in the eurozone, the future of Iranian and North Korean nuclear programs, as well as friction between Russia and the West.

Marsh notes that “the transition to an even more multipolar world order is likely to continue. As the United States, China, Russia and, to a lesser extent, the EU and Japan continue to be the strongest players, such growing powers as India, Iran, Saudi Arabia, Turkey and Brazil will increase their weight. ” It is also noted that “isolationist and protectionist sentiments have grown in many countries around the world – halting the process of globalization, at least for a while. Actions in one economy generate reactions in others. Taking into account all these factors, it is becoming increasingly difficult for countries to follow the path of collective progress in solving global problems. ”

Speaking of growing risks in key regions, Marsh stresses that, as applied to China, risks increase not only from trade wars with the US, but also against the background of growing military tensions in the South China Sea, which makes it more likely for unintended military clashes. On this basis, China is placed in the group of countries with a moderate risk of instability with 69.1 points. In turn, in the US, the political situation became more tense after in November 2018 representatives of the Democratic Party received a majority in Congress and, accordingly, more opportunities to put pressure on Donald Trump. Given the growing tensions with China, Marsh experts have identified the United States as a group of countries with a low, but not minimal risk of instability, 78.3 points. Neighboring Canada is recognized as more stable, receiving 80,

Russia was in the group of countries with a moderate risk of instability (62 points), along with China, India (63.5), Indonesia (62.8), Saudi Arabia (64.4) and Romania (65.2). Marsh experts believe that “friction between Russia and the West is unlikely to ease in 2019, especially given the re-election of Vladimir Putin in March 2018, which heralds the continuation of his tough foreign policy. Geopolitical risks will continue to remain at a significant level as Russia supports the rebels in eastern Ukraine and the regime of Bashar al-Assad in Syria. Against this background, the likelihood of new, more painful sanctions from the United States.

Domestically, after a controversial decision to raise the retirement age, support for Putin and his government dropped to a minimum level since the annexation of the Crimea in 2014. Such discontent, accompanied by a lack of progress in improving the standard of living of Russians, increases the risk of periodic public unrest. However, this is unlikely to lead to the destabilization of the government. Long-term risks stem from Islamist sentiments in the North Caucasus, which are still at a low level, uncertainty about Putin’s successor, the lack of economic reforms, and forecasts of weak GDP growth, aging, and population decline. ”

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