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Oil spills over into political tensions – a survey of 57 EMs

In a survey that delves beneath global headlines, our economists identify (or anticipate) fuel-related social and political tensions in 44% (25/57) of emerging markets. Higher fuel prices led to widespread strikes in some countries (Brazil, Argentina, India) and contributed to a change in government in others (Mexico, Jordan). Tunisia, Ecuador and Mexico are most at risk of further unrest.

It’s not all bad news for EM asset markets, however. There has been a low incidence of political tensions so far in several types of countries, including those: (i) with high general vulnerabilities but that have not been severely affected by fuel-related tensions (El Salvador, Nicaragua, Turkey); (ii) that have suffered no tensions so far but where they could yet erupt (Pakistan, Ecuador, Lebanon and Kenya); (iii) where potential tensions are being repressed by authoritarian governments (Egypt, Belarus); and (iv) the rest, i.e. low vulnerability economies without fuel protests.

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