Cost of living crisis to deepen in 2023, higher risk of civil unrest

A global risk intelligence company predicts the global cost of living crisis is set to worsen in 2023.

What’s worse is the same report by Verisk Maplecroft found that 101 countries out of the 198 tracked on the Civil Unrest Index (CUI) have seen an uptick in civil unrest

“The 10 emerging markets, where these risks have the highest potential to emerge, are Argentina, Brazil, Egypt, Tunisia, Lebanon, Senegal, Kenya, Pakistan, Bangladesh, and the Philippines,” said Verisk President, Matt Moshiri.

Picture – iStock.

‘Worst effects are yet to kick in’

Widespread discontent over rising living costs can be seen on the streets of developed and emerging markets alike, stretching from the EU, Sri Lanka and Peru to Kenya, Ecuador and Iran.

Russia’s invasion of Ukraine is supercharging food and fuel prices and stoking a cost-of-living crisis across the globe. However, the researchers warn worst effects are yet to kick in.

With no resolution of the conflict in sight, the global cost of living crisis will continue deep into 2023.

Pandemic, strained supply chains, inflation and war drive spike in civil unrest risk

Over half of the world has experienced increased civil unrest risk since the onset of the Covid-19 pandemic.

Middle-income countries struggling with the public purse will be most at risk.

Those governments cushioned the effects of the Covid-19 pandemic, but they cannot sustain the same level of spending as the Russian invasion of Ukraine drags on.

Countries that are dependent on food and fuel imports and/or maintain a system of subsidies on basic goods are under increased pressure.

Middle-income countries of Sri Lanka and Kazakhstan have already experienced destabilising unrest this year. In Sri Lanka’s case, rising food and fuel prices were a key factor; while Kazakhstan’s attempt to cut fuel subsidies was the spark.

Africa most at risk for coup attempts

Security forces’ with poor human rights records are at higher civil unrest risks, as the repressive response can stoke public anger and worsen civil unrest-related disruption.

85% of countries that are high or extreme risk on the Civil Unrest Index are also high or extreme risk on our Security Forces and Human Rights Index.Chief analyst, Jimena Blanco and Middle East/ North Africa analyst Hamish Kinnear

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The report found the main risk of civil unrest in middle-income countries is not limited to its derailing effect in 2022, but it also reduces its appeal as an investment destination going forward.

There have been six successful coup attempts in the past 11 months, taking place between February 2021 and January 2022.

The bad news is that there is rarely any improvement in economies after successful coups.

The latest research reveals that Africa currently accounts for 50% of the highest-risk countries, followed by Asia with 30%.

But based on the structural factors we’ve identified, Bolivia, Côte d’Ivoire, Gabon, Guinea, Iraq, Kyrgyzstan, Madagascar and Zimbabwe are among the most vulnerable,

But Kinnar and Blaco found that mitigating factors will likely prevent a coup in some of these countries.

Burkina Faso and Guinea-Bissau are just the latest in a growing list of African countries that have witnessed a coup attempt in the last five years.

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