Global Risk Themes 2020, #3: Policy flux and polarisation in the G20

The US will hold congressional as well as presidential elections in 2020, with major implications for the business regulatory agenda domestically and for global companies with markets and supply chains linked to the US. China will meanwhile finalise its fourteenth five-year plan, covering the period 2021-25, against a backdrop of slowing growth rates and deepening trade competition with the US.

In Germany, splits within the ruling coalition and gains for right-wing populists in local elections during 2019 are fuelling speculation of an early election being triggered in the coming year. An early election in the UK in December 2019 could produce another unstable government riven by divisions over Brexit, while Italy will enter 2020 with a fragile coalition and sustained demands for early elections from the populist right. The result of elections in Canada in October means that Prime Minister Trudeau will have to govern without a parliamentary majority and amidst mounting tensions between the federal government and Conservative-dominated provincial administrations.

Jair Bolsonaro’s administration in Brazil secured congressional support for a key pension reform bill in 2019 but must steer the rest of its legislative agenda through a deeply divided congress. A new Peronist government in Argentina will have to balance the competing pressures of hyperinflation, unsustainable foreign debt and public demands for a relaxation of austerity policies. 

Current ASTRAmap policy risk and score trends within G20 countries

2019 saw some notable areas of political continuity within the G20, with elections returning incumbent governments in India, Indonesia and South Africa and an upper house election in Japan comfortably restoring the ruling party’s majority. However, the election in Indonesia was followed by a wave of populist social policies triggering violent anti-government unrest. Factionalism and a politically weakened president are limiting the scope of reform and sustaining policy risks in South Africa.

The reform agenda of the Saudi Crown Prince continues to strain relations within the royal family, reflected in further flux in senior ministerial positions during 2019. In Turkey, electoral setbacks for the ruling AKP have compounded President Erdogan’s authoritarian and interventionist tendencies, including on monetary policy. Policy trends in Russia are also broadly negative from the perspective of foreign businesses, reflected in the recent introduction of regulations restricting levels of foreign ownership in the tech sector.

France has been one of the more stable policy environments within the G20 in 2019. However, the next stage of President Macron’s reform agenda coupled with reduced growth could feed a public backlash and further increase in support for right-wing populists in 2020.

Sibylline Annual Forecast 2020: Global Themes

This post is part of a series of eight global themes to watch in 2020. These form part of our annual forecast product, released to clients in December and including regional deep dives on the Americas, Europe, MENA, Africa, Eurasia and Asia Pacific in addition to an overview of key events and flashpoints in the year ahead. Please contact us if you are interested in receiving this product or finding out more about the World Risk Register.