Trade tensions hit political stability - Marsh

Rising trade tensions are expected to continue throughout the year, resulting in global political and economic uncertainty for multinational businesses, according to a new report by Marsh.

According to Marsh JLT Specialty’s Political Risk Map 2020 and the World Economic Forum’s Global Risks Report 2020, economic confrontations between major global powers are among the most concerning risks for the year.

Key findings of the Marsh report include:

• The multiple challenges to free trade and multilateralism seen in 2019 are expected to deepen this year, particularly as the US presidential election approaches.
• Hong Kong saw the second-largest deterioration in the short-term political risk index (STPRI) score globally after months of protests that have strained its relationship with mainland China. Sudan saw the largest deterioration in STPRI score.
• The UK’s negotiations over its post-Brexit relationship with Europe are expected to continue to dominate the region’s political risk landscape.
• The STPRI scores for several Latin American countries – including Colombia, Chile, Ecuador, Haiti, Blivia and Argentina – have deteriorated as their governments have been challenged to balance economic reforms and social stability.
• In Africa, STPRI scores for Guinea, Mali and South Africa remain unchanged from 2019, but upcoming elections may generate political instability. Rwanda posted the largest STPI-score improvement in Africa, driven by continued economic growth and a stable business environment.

“While this year’s Political Risk Map highlights a challenging geopolitical and economic outlook, there are very significant areas of opportunity for organisations that are equipped to navigate the complex and dynamic risk environment,” said Nick Robson, global practice leader for Marsh JLT Specialty’s Credit Specialties. “Developing a sophisticated understanding of the political risks facing their business, alongside political risk insurance, can help firms manage their exposure and fully realise the opportunities for growth global trade and investment brings.”