Resurgence of COVID-19 cases and reimposition of lockdown restrictions have hurt business sentiments and led to increase in overall global risk, says GlobalData, a leading data and analytics company.

The latest update to GlobalData’s report, ‘Country Risk Index (GCRI) Q1 2021’, finds that global risk increased to 43.53 out of 100 in 2021 from 43.42 in Q4 2020.

Gargi Rao, Economic Research Analyst at GlobalData, comments: “The GCRI score for Q1 2021 remains much higher than pre-pandemic level of 41.07 in Q4 2019. High risk score indicates higher risk facing the economies which may deter investors. The re-emergence of Covid-19 cases and the consequent lockdown restrictions added to the owes.’”

The GCRI score is formulated by GlobalData to help companies prepare their global business strategies and analyse risk parameters pertaining to the political, economic, social, technological, legal and environmental factors. Find out about insights from GlobalData’s GCRI report, looking at key regions, below:

Europe – Resurgence of COVID-19 looms large

Europe recorded the lowest risk during Q1 2021, however, the region witnessed an increase in risk score in 2021 Vs 2020 on account of a resurgence of COVID-19 cases, rising protests and civil unrest against lockdowns, as well as mounting government deficits and rising unemployment rates. Switzerland, Sweden, Norway, Denmark, Germany and Finland were featured in the list of top 15 nations with the least risk in Q1 2021.

Rao continued: “Political risk in Europe increased due to a rise in public protests in France, Germany and Italy, as well as growing anti-Europe sentiments. Furthermore, the rapid increase in COVID-19 cases, along with new COVID-19 variants, led to decreased economic activities throughout the Eurozone.”

Asia-Pacific – Geopolitical tensions among countries to have deeper impact

The Asia-Pacific region’s risk score increased marginally in Q1 2021 over the previous quarter due to rising geopolitical and economic tensions, including a slowdown in the Indian economy, political unrest in Myanmar, ongoing South China Sea conflicts, and delay in vaccine rollouts.

Rao notes: “Growing Chinese influence on political and economic administration of Taiwan and Hong Kong posed high political risk to other countries in the region.”

Singapore ranked as the country with the lowest risk in Q1 2021 due to its timely policies to combat COVID-19.

Americas – Fiscal prudence mars economic recovery

Alongside the heightened health crisis, a rise in poverty and social instability increased the risk score of the Americas region in Q1 2021 over the last quarter.

Rao highlighted: “In the US, political tension between the Republicans and Democrats intensified in Q1 2021, and continuing political unrest in Venezuela, Haiti and Nicaragua along with Guerilla group activities in countries such as Colombia and Ecuador have added to region’s high political risk.”

The pandemic has compelled Americas Governments to make out-of-budget expenses.

Rao comments: “Governments in the Americas need to follow a strong fiscal consolidation policy to achieve sustainable growth over medium term.”

Middle East and Africa – Political uncertainty along with slow vaccination rollout in poorer nations weighs down growth prospects

The Middle East and Africa (MEA) region witnessed the highest risk among all regions in Q1 2021, with a score of 51.51 compared to 51.42 in Q4 2020.

Rao added: “Continuing communal unrest in poor states has raised the risk of uneven vaccination programs and volatile food prices. An escalation in violence between Israel and Palestinians says hundreds killed and injured in April and May 2021, with Palestinian residents bearing the brunt of the devastation.

“Although a rebound in oil prices would support the MEA region’s recovery prospects, political unrest in countries such as Yemen, Syria, Ethiopia, Israel, Palestine and Mali pose a downward risk to economic development if it is not controlled by international interventions.