This data has been produced by ASTRA. Sibylline's ASTRA (Aggregated Strategic Threat and Risk Assessment) software quantifies 32 risk factors for 249 countries, select cities, and sub-national regions with over six years of historical scores and trends available.
The sharp improvement in policy risk in North America has accompanied the arrival of the Biden Administration and its, albeit vulnerable, control over Capitol Hill. This has benefitted both domestic and foreign policy stability, notwithstanding some short-term reversals during Biden’s early months in office. One notable exception to reversion to the mean is in relation to trade and wider policy towards China, which remains hawkish. However, elsewhere, on immigration, climate and diplomatic relations, the US is becoming a more conventional international actor once again.
Similarly beneficial trends are evident in the Middle East where a reduction in policy risk is being fuelled by a desire among oil-reliant economies to boost foreign investment and diversification. This has seen the relaxation of restrictive ownership and employment laws and burgeoning competition between key states in the region, for example Saudi Arabia and the UAE. While there is the possibility of a downturn should encouragement turn into coercion (most pertinent to Saudi Arabia), policy risk is likely to be favourable for the remainder of 2021.
Europe has failed to match the improvements seen in the US, largely due to the continuing fallout of the Covid-19 pandemic. Elections in Germany will see the end of the Merkel era after 16 years, while French President Emmanuel Macron is set for a tight race next year against the far-right Marine Le Pen after a term in which Macron has largely been unable to advance his ambitious domestic agenda. Meanwhile, the struggles between Brussels and Eastern European EU member states, not to mention the recently departed UK, are set to bring greater uncertainty over collective policy and the safety of any investment.
Much of Africa is still preoccupied with the impact of the pandemic, which it has never truly contained and is now struggling to address through vaccinations. Consequently, there has only been a slight downturn in policy risk from last year amid widespread policy continuity. Asia’s policy environment is worsening due to sustained China-US tensions, which are percolating through to Washington’s regional allies, especially Taiwan and Australia. Meanwhile, India is struggling to control its worsening Covid-19 outbreak and policymaking could prove erratic as Modi’s populist government seeks to distract attention with headline-grabbing policies.
Meanwhile, Latin America’s travails continue to worsen amid contested elections (Peru), costly Covid-19 outbreaks (Brazil) and burgeoning financial crises (Argentina). The paucity of political leadership in the region and a profusion of populists gives rise to an especially volatile policy environment.