Geopolitical tensions, increasingly protectionist sentiment and ongoing trade disputes are leading to increased uncertainty and risk for multinationals with direct foreign investments, according to a new report from Marsh.

The risk adviser says a transition to a more 'multi-polar world order of protectionism' is likely to continue in 2019, with isolationist and protectionist sentiments and practices rising in some counties, halting, at least momentarily, the process of globalisation.

This latest analysis of short- and long-term political, economic and operational stability of some of over 200 countries and territories is designed to provide insight into where risks are most likely to emerge, to help multinationals make more informed decisions on how to deploy financial resources in the year ahead.

It warns that trade tariffs and geopolitical disputes between the US and China could escalate in 2019, bringing the risk of further Chinese retaliation and US counter-retaliation.Export heavy economies, like Germany, are likely to be impacted, according to the risk adviser.

“Businesses with direct foreign investments are facing an unprecedented breadth of challenges today from emerging economies to so-called developed economies,” says global practice leader of Marsh's Credit Specialties business, Evan Freely. “In uncertain times, vigilance and broad, systemic risk analysis coupled with political and trade credit insurance, will be vital to minimising these threats.”


Global political tensions rising (Source: Marsh Political Risk Map)

· Russia’s relations with the West will remain tense in 2019 and could result in further sanctions on Russia.

· The UK’s negotiations to exit the European Union continue to loom over the political risk landscape, while continued political instability in Spain led to a sharp decline in the country’s short-term political risk index.

· Positive results from 2018 presidential and legislative elections in Guatemala, Chile and Paraguay led to improved short-term political risk in those countries, while continued political unrest in Nicaragua significantly reduced the country’s short-term political risk.

· The African region once again saw some of the biggest improvements in political risk and also some of the most notable deteriorations. Short-term political risk scores in South Africa, Mozambique, and South Sudan all improved, while uncertainty around elections and deteriorating economic and humanitarian conditions have led to sharp increases in political risk in Zambia, Mali, Algeria, Tunisia, Cameroon and the Central African Republic.

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