Global Geopolitical Risk Outlook: H1 2023 Report

Key Takeaways

• COVID 19 and the economy: Barring a rebound in caseloads, we see minimal risk of sociopolitical unrest or polarization arising from public concern about COVID-19. To the extent that either materializes, we anticipate that emerging markets will be hit hardest.
• Economic drivers of political unrest: Developed and emerging markets are equally at risk. Net negative sentiment on the economy will remain similarly acute for both through at least H1. As a silver lining, public concern about COVID-19 appears to have become decoupled from economic views and is unlikely to exacerbate political unrest by weighing them down.
• Labor and social unrest: Developed markets saw a greater uptick in public demand for labor protections over 2022 compared with emerging markets, paralleling the trajectory of perceptions of economic stability. We expect demand for labor protections to moderate as economic sentiment improves, but we anticipate little such moderation prior to H2 2023. Among industrialized countries, public concerns about job security and livable wages are poised to be a more likely driver of unrest than concerns about income inequality.
• Trust and polarization: Persistently low trust in government will sustain political polarization over H1 2023 and complicate policymakers’ efforts to assuage public concerns, particularly in developed markets. The lack of a clear correlation between public views of the economy and trust is a double-edged sword: While a net decline in economic optimism over 2022 did not dramatically dent trust, improving economic conditions over 2023 are unlikely to restore it.
• Brazil: Recent protests belie the extent of public support for democracy but accurately reflect distrust of the Brazilian government. We expect protest-driven unrest to persist.
• China: In the wake of Beijing rolling back the country’s oppressive “zero-COVID” policies, political discontent will continue to simmer, albeit in private.
• United Kingdom: The public’s improving economic outlook has not restored faith in PM Rishi Sunak’s administration. The decoupling of economic sentiment and trust in government will magnify instability.
• United States: At year-end, a plurality of Americans said the U.S. economy was stable. The optimism is worth noting but does not price in the full range of pocketbook considerations facing voters with their eye on President Joe Biden’s White House run in 2024.