Food and fuel surge raises risk of social unrest for emerging markets – report

A man takes prepared food to eat during Iftar, a meal to end the fast at sunset. Picture taken April 20, 2022. REUTERS/Mohamed Abd El Ghany

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LONDON, May 11 (Reuters) – Rising fuel and food prices are set to fuel an “inevitable” rise in civil unrest, with middle-income developing countries such as Brazil and Egypt particularly at risk, according to a report from a risk management consulting firm.

Three-quarters of countries expected to be at high or extreme risk of civil unrest by the fourth quarter of 2022 are middle-income countries, as defined by the World Bank, Verisk Maplecroft said in an update. of its political risk monitor.

“Unlike low-income countries, they were wealthy enough to provide social protection during the pandemic, but are now struggling to maintain high social spending that is vital to the living standards of large swaths of their population,” the report found.

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Argentina, Tunisia, Pakistan and the Philippines were also among the countries to watch over the next six months, the authors said, noting their heavy reliance on food and energy imports.

Russia’s war in Ukraine accelerated the rise in food prices, which hit an all-time high in February and again in March. Energy prices also rose sharply. Read more

“With no resolution to the conflict in sight, the global cost of living crisis will continue into 2023,” the report said.

Lebanon, Senegal, Kenya and Bangladesh face similar pressures.

Ten countries to watch

The report cited Sri Lanka and Kazakhstan as examples of middle-income countries that have already suffered turmoil this year. The former saw rising food and fuel prices contribute to escalating tensions, while an attempt to cut fuel subsidies sparked protests in Kazakhstan. Read more

Civil unrest could hamper an eventual economic recovery, but also deter investors focused on environmental, social and governance (ESG) factors, he said.

“Some countries risk falling into a vicious cycle, in which deteriorating governance and social indicators make them pariahs of ESG investing, impeding the flows needed to improve economic performance and meet societal needs.”

The report found that more than 50% of the nearly 200 countries covered by the index have seen an increase in civil unrest since the COVID-19 pandemic.

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Reporting by Jorgelina do Rosario; Editing by Karin Strohecker and Richard Pullin

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Edward N. Arrington