1. Assessment of global political risks (consensus)
A risky business. This week we launched Morning Consult Global Political Risk RatingHigh-frequency risk ratings for 36 markets, derived from our daily political survey data. Rated countries are assigned both numeric and letter-based scores, and are subject to rating actions (upgrades, downgrades), rating watches and forward outlooks that are published monthly.
As we describe in more detail in an accompanying document information note on methodologyOur ratings are derived from a narrowly defined composite measure to reflect the degree of public support for incumbent governments, with higher risk (more negative values) associated with a greater likelihood of economic policy uncertainty and social unrest, according to our ongoing validation work discussed there. The table below shows our full list of ratings for September.
As the debate continues over whether developed markets or, conversely, emerging and frontier markets pose higher political risk, our ratings confirm the growing consensus that developed markets are starting to become the riskier bet. While the two groups of markets had similar average risk profiles several years ago, they are now showing clear signs of divergence, with emerging and frontier markets displaying more favorable profiles (higher values indicate lower risk).
There are both political and economic reasons for this phenomenon. On the former, there is a growing perception that developed markets suffer from political dysfunction that leads to erratic policy decisions and government instability—trends historically associated with less wealthy countries. On the economic side, it may also be that people in developed countries are simply more pessimistic about their country’s political situation because they can afford to be. By contrast, among people in less wealthy markets, where government capacity is often weak, more optimistic assessments of politics may predominate simply because the public perceives that their political leaders have fewer levers to pull and gives them a free pass.
For companies and asset managers whose industries and portfolios require special attention to the political side of these dynamics, and for public sector entities monitoring stability issues in countries of concern, our ratings provide a new set of tools to systematically assess them. The full list of ratings is available herewith our MACRO Inaugural Political Briefingwhich provides our assessment of rating factors and outlook for markets experiencing rating upgrades/downgrades and rating watches this cycle, including the United States, Nigeria, Indonesia, Mexico and Thailand. You can find our unclosed project overview note here.
2. France (Against)
Mr. Brexit in the breach. President Emmanuel Macron appointment Michel Barnier — best known for his role as the EU’s chief Brexit negotiator — as prime minister after 60 days of waiting struck Some consider it a strange choice, even a real snub for the left after the June 30 elections that gave the left wing of the political spectrum a surprise victory.
But Macron knows that without an impressive demonstration of strategic voting to retain power, sanitary cordon against the right, the results would have been very different. With right-wing parties clinching With 33% of the vote in the first round and a very polarized and strongly right-leaning political body, his choice is undoubtedly a concession made to the voters, but not to those who ended up having representatives in parliament.
As we noted earlier researchElections are themselves drivers of polarization, and France’s are no exception. The overall share of French adults at the extremes of the left-right ideological scale increased by about five points in the run-up to the first round of legislative elections.
It seems that the rise in French polarization will be short-lived, given the reversal of the trend that began in August after the second round of elections. But with France already ranked third in our ranking, Ranking of political polarization (higher ranks indicate greater polarization), a return to baseline will be little consolation to those watching France’s highly divisive political scene with concern.
3. Türkiye-Israel relations (consensus)
The feeling is mutual. The Economist journalists recently claimed that relations between Israel and Turkey are at a breaking point. While the resilience of the bilateral relationship to the strain is an open question, we agree that the relationship is at its lowest point since we began tracking bilateral views in late 2021. The reason is clear: Hamas’ October 7 attacks on Israel and Turkey’s subsequent support for the organization derailed a rapprochement from early 2022.
Things have gone wrong. Turkish Prime Minister Recep Tayyip Erdoğan and Israeli Prime Minister Benjamin Netanyahu have blows exchangedTurkish Prime Minister comparing Netanyahu to Hitler, and Netanyahu responding with accusations of Turkish genocide against the Kurds.
Bilateral relations are not beyond repair, but public opinion on both sides will somewhat prevent the two leaders from seeking a detente in the near future, and certainly until the situation in the Palestinian territories reaches a balance, however precarious. We are optimistic because the regional interests of both countries point in a broadly similar direction, with both having more to lose than Iran and its proxies in a broader regional war.
4. China-Africa (Against)
This year Forum on China-Africa Cooperation The Forum on China-Africa Cooperation (FOCAC) in Beijing included the hallmarks of elite-level top-down diplomacy: “family photos,” breathtaking promises of Chinese investment, and a new focus on military, police, and political exchanges. Much of the discussion that followed focused on whether this would change China’s standing on the continent. But in sub-Saharan Africa’s two largest economies—Nigeria and South Africa—China has grown steadily in popularity over the past two and a half years. Nigeria in particular is one of China’s largest partners on the continent, receiving remittances from China. one twelfth of the total amount promised to FOCAC.
2016 was the year high tide line China’s frantic overseas investment and lending, with subsequent backlash from both sides internally And externallyalongside the spread of narratives about “debt trap diplomacy” and the attention paid to increased corruption around Chinese projects. If the Nigerian and South African cases give a signal of opinion on a continental scale, this setback may have been only temporary.
In U.S. government circles, concerns about overall levels of indebtedness to China have partly given way to concerns about targeted resource capture, particularly critical minerals used in high-tech products like batteries and semiconductors that are essential for the climate. And indeed, one of the areas of intervention China’s new approach to Africa is to invest in green energy and technology.
This sets the stage for increased competition between the United States and China on the continent in the years to come. Chinese discourse on the continent has taken an openly anti-western In Africa, China has appealed to a “shared history of colonization.” At the same time, China’s engagement in Africa is now clearly more security-oriented, with an emphasis on the Global Security Initiative. Previously, Chinese engagement focused on elite capture and economic cooperation, but our data shows that Beijing is seeing successes that go beyond its traditional strategies.
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