Allianz Trade: Social Risks Increased Worldwide in 2024
Allianz Trade's latest report indicates a global decline in social resilience in 2023, with risks expected to rise further in 2024 due to cost of living increases and political instability.
Social risks have risen globally, primarily driven by increasing living costs and a widening gap between advanced economies and emerging markets, according to Allianz Trade's latest Social Resilience Index report. The index, which measures the economic and social resilience of 185 countries using 12 indicators, fell by an average of 2.1 points between 2021 and 2023.
Johan Geeroms, Director of Risk Underwriting Benelux at Allianz Trade, highlighted that factors such as political stability, employment rates, income inequality, and public spending on welfare are key determinants of social resilience. "Globally, the situation has deteriorated, and we believe this negative trend will continue," Geeroms stated.
The year 2024 presents a significant electoral calendar, with countries accounting for 75% of global GDP heading to the polls, including the United States, the European Union, and India. This heightened political uncertainty can deter investment and disrupt global trade. The report also identifies artificial intelligence (AI) as a new potential threat to social stability due to possible job displacement.
Countries reliant on food and fuel imports are expected to experience the greatest increase in social unrest, while commodity-exporting nations like the UAE, Qatar, and Kuwait show improved social resilience. The report further notes that inflation, sometimes exacerbated by companies increasing profit margins ('Cupideflation'), can disproportionately affect low-income households, adding to potential social friction.