Global risk index elevated due to new variants

MANILA, Philippines — Global risks have declined modestly as COVID-19 vaccinations are ramped up, but new variants leading to a surge in cases are threatening improvement in overall business sentiment.

GlobalData, a leading data and analytics company in the UK, said the latest global risk index marginally decreased to 42.74 out of 100 in the April to June period from 43.53 the previous quarter.

Risks generally went down as more countries implemented their COVID vaccination programs.

While the score is an improvement, this is still much higher than the pre-pandemic level of 41.1. A high risk score indicates higher risk facing the economies, which may deter investors.

The threats of more transmissible COVID variants that lead to renewed restrictions are putting more pressure on heightened risks.

The Philippines, for one, reverted to the strictest quarantine restriction in the beginning of the second quarter to address the sharp rise in new COVID cases.

The country gradually opened up in May and June, only to return to lockdown measures in August.

Based on GlobalData’s risk index, the Middle East and Africa had the highest risk at 50.42, followed by the Americas at 46.69.

Asia-Pacific came in third at 41.28, while Europe recorded the lowest at 33.77.

“The implementation of prolonged fiscal policies, along with the procurement and distribution of COVID-19 vaccines across the globe, will be the drivers to reduce risk,” GlobalData business fundamentals analyst Gargi Rao said.

“Global risk depends on how governments will strategically overcome economic problems in terms of mounting public debts, fiscal deficits and reduce overall political risk.”

The risk index aims to help companies prepare their global business strategies and analyze risk parameters pertaining to the political, economic, social, technological, legal and environmental factors across regions in the world.

In Asia Pacific, GlobalData said geopolitical and economic tensions among countries are expected to have a deeper impact.

“Rising geopolitical tensions, including the Taliban’s takeover of Afghanistan, a military coup in Myanmar, ongoing South China Sea conflicts, and emergence of new variants of COVID-19, pose risk,” Rao said.

She added that the recent ratification of the Regional Comprehensive Economic Partnership by Japan in June, alongside China and South Korea, is set to boost economic integration and trade in the region.

Meanwhile, GlobalData said risks remain in the rest of the world, particularly amid protests against COVID restrictions and rising radicalization in Europe.

There is also rising discontent against the government and continuing political unrest in the Americas while continuing communal unrest in the Middle East and Africa has raised the risk of uneven vaccination programs and volatile food prices.