A hungry man…

Economic pressures bring political instability – and economic pressures abound today. Global supply chains are still suffering from frictions related to the pandemic-re-opening, there is war in two of the world’s key food exporters, and sanctions on one of the world’s biggest crude oil exporters. Life could not be any worse for emerging economies that are home to most of the world’s poorest population.
Social unrest is rising as risks rain down on emerging economies. Developing nations are suffering the biggest hit from this year’s oil shock because many are largely import-dependent, and are being crushed by a combination of high international prices and weak currencies. While some developed markets (e.g. Canada, New Zealand, Belgium) – where demonstrations are relatively rare – took to the streets earlier in the year, alarm bells are ringing in emerging economies like Kazakhstan, India, DR Congo, Zimbabwe, Kenya, Tunisia, Burkina Faso, Ethiopia, and Ghana, in the wake of Sri Lanka’s revolution – the most recent domino to fall.

Inflation poses serious challenges for emerging market countries as a number of factors – including supply chain disruptions and tighter fiscal and monetary policy – intensify prices globally. As food prices are a barometer for unrest, public anger is linked to the failure of central banks to promptly quell the inflationary shocks that had been building since the pandemic struck. Higher fuel bills are also exacerbating inflation in countries that are already struggling with soaring food prices. The cocktail is fostering public unrest and is quite familiar to democratic governments who from experience know that this is one of the surest ways to lose public appeal.

Historically, emerging economies are sensitive to food and fuel prices as many past governments had resorted to providing subsidies on these items to appease the public and score political points. But in the face of burgeoning import bills, these subsidies have become fiscally unsustainable for governments to uphold. Like Sri Lanka, many emerging economies are staring down the barrel of economic doom and some – like Ghana, Tunisia, Egypt, Lebanon, and Pakistan – have turned to the International Monetary Fund (IMF) for bailouts-, while the likes of Nigeria are keeping their head above water.
As societies have become more combustible, the outbursts of public anger are not just about food and fuel prices. In most countries, they are also about failures of the state to properly cater to the public welfare while the elite are getting by pretty well. Social unrest is being caused by frustrations ranging from governments’ economic mismanagement to mounting inequality, corruption, constitutional crises, and other malfeasance.

While they may be considered bastions for economic growth, emerging economies are not also short of political bumps, and someone who has been deprived of basic necessities will not be easily placated. Therefore, from Asia to Africa, the Middle East, and Latin America, the continued cost-of-living squeeze means that protests are far more likely to swell, with severe economic ramifications, but nobody knows where the next bit of unrest could occur.

Countries like Nigeria, Algeria, South Africa, Brazil, Tunisia, and Ethiopia, with pre-existing grievances, have the highest risk to domestic stability in the face of spiraling prices, and slowing productivity. This could impose significant economic costs. The short to medium-term economic costs of social unrest can be quite large, especially in emerging markets and developing economies, and could potentially have long-lasting economic consequences. In some EMDEs, protests can raise some political dust as their election cycle approaches. But protests can also be catalysts for political reform and social change.