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World Investment and Political Risk report

“When the Tide Goes Out, You See Who’s Naked”

Cara Santos Pianesi's picture

Said Martin Sandbu, the FT economics writer that moderated the FT-MIGA Summit, Managing Global Political Risk, last week in London.   
 
This is the fifth year that MIGA, the political risk insurance and credit enhancement arm of the World Bank, co-hosted the event to launch its World Investment and Political Risk report.  Undoubtedly, these have been heady years and most participants agreed that, while it is still strong, political risk has waned since the global financial crisis and the Arab Spring. This sentiment dovetails with the findings of the report, which show that macroeconomic stability won by just a hair over political risk as the factor that international investors fear most.
 
Also in line with these findings, the World Bank’s Andrew Burns cautioned that the world will soon be grappling with the next group of challenges brought about by the tide. What tide? Here, Sandbu meant the significant investment that has flowed to developing countries in search of yield over the past few years, quantitative easing that has kept economies afloat, and high commodity prices. All of these factors are now in flux.
 “When the Tide Goes Out, You See Who’s Naked
And now, the (potential) nudity. That is, as investment to emerging markets tapers, macreconomic tools are used less bluntly, and commodity prices normalize, will countries have laid enough strong economic foundations to weather the inevitable changes that will occur? And as this MIGA-sponsored conference deals with political risk, how will economic changes affect the destiny of leaders and, resultantly, citizens?
 
Tina Fordham of Citi Research emphasized that the structural determinants of political risk are still very present. She noted little improvement in unemployment and an increase in vox populi risk. By this she meant shifting and more volatile public opinion around the world—amplified by social media—has recently resulted in a proliferation of mass protests.  Panelists discussed several other risk factors, including increasing polarization in politics, pressure on central banks to keep the economic show on the road, reduced investment in infrastructure, and a reversal in living standards in some hard-hit countries.
 

MIGA: Beyond "Project of the Year"

Kevin Lu's picture

Today in Singapore, MIGA and IE Singapore co-hosted a seminar:"Managing Global Political Risks: Old Risks, New Moment."

After the welcome speech by IE's Assistant CEO Terence Seow, Michel Wormser, MIGA's Vice President and COO, delivered the keynote speech, which touched upon the current global economic turbulence, potential investment opportunities for Asian investors, the perception of risks, and what role the World Bank Group can play in facilitating private capital into productive projects. Michel noted that—while he understands that many Asian companies tend to invest in nearby countries—there are also plentiful of opportunities in Africa and Latin America.

Experts Weigh in on FDI and Political Risk

Michael Strauss's picture

On Wednesday, May 5, 2010, MIGA convened a panel discussion on the state of political risk in the world economy, which proposed to answer the pregnant question: “Are we moving into a riskier world?”  

MIGA Chief Operating Officer, James Bond, moderated a panel that included: