2020 Global Forecast

Overview

If 2019 marked a period of intense volatility in geopolitics, 2020 will present major world leaders with opportunities to resolve current conflicts. In the case of the US and China, economic pragmatism will be a driving factor behind an increasingly certain agreement on trade, which will defuse bilateral tensions and lower the risk of new tariffs.

Meanwhile, growing public awareness over climate change, in part due to a growing global protest movement will encourage businesses across sectors to rethink their corporate strategies. Investor pressure will also grow, providing an added incentive for multinational corporations (MNCs) to reduce their carbon footprint. In the US, a highly anticipated presidential election will see a Democratic Party candidate challenge incumbent President Donald Trump, who will focus his campaign on his economic policy track-record while in office and seek to divert attention from the ongoing impeachment probe.  

Social unrest will continue across large parts of Latin America and the Middle East over socioeconomic grievances. In Latin America’s two-largest economies – Brazil and Mexico – low levels economic growth and insecurity will continue to pose key challenges. 

Technology and security will become increasingly intertwined as the revolutionary potential of 5G begins to materialise. National security concerns will likely delay the development of 5G technology in some countries. Targeted disinformation campaigns will threaten to fuel tensions across many countries in Sub-Saharan Africa amid increasing competition for influence from both foreign businesses and state actors.



americas

United States & Canada

US presidential race set to determine course of economic, security, and foreign policy

In 2020, voters across the United States will cast their ballots in the country’s presidential election. The poll is likely to pit incumbent Republican President Donald Trump against a still-undetermined candidate from the Democratic Party. The election presents voters the opportunity to cast their verdict on Trump’s unorthodox and polarising presidency, and will significantly determine the trajectory of US government policy on the economy, trade, immigration, national security and foreign relations, among other policy areas. Voters will also elect all 435 members of the House of Representatives, and slightly more than one-third of the Senate.

President Donald Trump’s campaign likely to focus on record in office

Barring developments in the ongoing impeachment inquiry into whether Trump sought political favours from the Ukrainian government in exchange for US military aid which would exclude him from the electoral process, the New York-hailing businessman is almost certain to be the Republican candidate. Trump, whose campaign has adopted the slogan ‘Keep America Great’, will centre his pitch to voters on the fulfilment of promises from the 2016 election campaign. These include stimulating the economy, create jobs, address the US’s trade imbalances, and withdraw US forces from overseas. Despite this, Trump has failed to substantially deliver on his key pledge of building a wall along the country’s southern border with Mexico, for which Congress deprived the administration of funding. 

Leading opponent Joe Biden faces multiple challengers as the Democratic Party elects a nominee

For the Democratic Party, the primary contest will dominate the first half of 2020. The leading candidate is former vice-president Joe Biden, a vastly experienced and recognisable figure who represents the centre ground among his party. Biden’s strongest competition is likely to come from senators Bernie Sanders and Elizabeth Warren, both of whom advocate a higher degree of state interventionism. 

 

Once a candidate has been chosen in June, attention will then turn to the head-to-head race for the White House. As in 2016, this is highly likely to be a divisive and polarising contest. Ultimately, the victor will be the leader who prevails in enough so-called swing states, including Colorado, Florida, Iowa, Michigan, Minnesota, Ohio, and Pennsylvania. Many of these voted for Trump in the previous presidential election, however, have shown movement towards the Democrats in more recent midterm and special elections.

Canada’s new government set to prioritise internal cohesion, balancing provincial interests

North of the US border, Canadian Prime Minister Justin Trudeau will begin the first full year of his second administration. Trudeau, whose Liberal Party won the highest number of seats in October’s federal election but are without a parliamentary majority, will struggle to pass landmark legislation in his second prime ministerial term. In its first year, the government is likely to focus on strengthening domestic cohesion, particularly with many citizens of the oil-rich western provinces of Alberta and Saskatchewan feeling unrepresented in Ottawa. Former foreign minister Chrystia Freeland’s appointment as deputy prime minister and chief of intergovernmental affairs seeks to address growing political divides between the country’s provinces.

Latin America & Caribbean

Unrest likely in countries across region as citizens demand action on socioeconomic issues

Across Latin America and the Caribbean, 2020 is likely to continue to see socioeconomic grievances translate into civil unrest, disrupting business travel and foreign investment. Such mobilisations, exemplified by unrest in Bolivia, Chile, and Ecuador in late 2019, are largely unrelated to each other, yet share multiple commonalities. These include anger over vast wealth inequalities, low economic growth, meagre formal employment opportunities, widespread perceived corruption, and physical insecurity. These grievances are compounded by low commodity prices, on which many Latin American countries rely for tax revenue, and large fiscal deficits, prompting governments to reduce public spending.

Entrenched political crises and constraints on public spending are likely to prompt protests

Political crises are likely to persist in several countries. In Venezuela, the humanitarian crisis and extreme insecurity will worsen as international sanctions deprive the government of President Nicolás Maduro of vital foreign exchange. Maduro, however, will look to maintain his grip on the country’s security services and is likely to cede further geopolitical and commercial influence to Russia, China, and Turkey as he holds onto power. In Bolivia, the political dispute surrounding former president Evo Morales’ exit will likely outlast fresh presidential elections, leading to periodic unrest in cities including La Paz, El Alto, and Cochabamba. In Chile, however, voters will overwhelmingly support the drafting of a new constitution in a referendum, which will enhance citizens’ political and social rights. Hardline protesters, however, will continue to demonstrate in major cities for several months, raisings risks to business travellers and operations. Constraints on public spending will heighten protest activity in countries, including Colombia, Costa Rica, Ecuador, Guatemala, Honduras, and Paraguay. 


Region’s two major economies face economic, internal security challenges

In the region’s two largest economies – Brazil and Mexico – politics will be dominated by internal challenges, particularly related to low economic growth and insecurity. Brazil’s president, Jair Bolsonaro, will seek to privatise multiple state assets amid low economic growth, likely prompting significant industrial action. The release of popular ex-president and leftist leader Luiz Inácio Lula da Silva from prison elevates the likelihood of significant anti-government demonstrations in major cities and is likely to further polarise politics. In Mexico, President Andrés Manuel López Obrador will remain popular, despite low economic growth and rising insecurity. Various small- and medium-sized countries, including Dominican Republic, Guyana, and Trinidad and Tobago, will hold elections.


asia-pacific


Northeast Asia

Taiwan’s January elections likely to see the incumbent re-elected as cross-strait tensions mount

Taiwan’s January 2020 elections will likely see the incumbent president, Tsai Ing-wen, voted back into office. The election will be crucial in determining cross-strait relations. Tensions between Beijing and Taipei have flared since the US and Taiwan approved a USD2.2 billion arms deal on 1 July. Frictions with Beijing and Hong Kong have also intensified over ongoing attempts to extradite a criminal suspect from Hong Kong indirectly responsible for the amendment to the territory’s extradition law, which sparked current violent unrest in Hong Kong. Protests on the island in solidarity with the Hong Kong pro-democracy movement and against Beijing’s proposed implementation of its ‘One country, two systems’ – the policy that governs Hong Kong – over 2019 also illustrate increasing regional friction, likely favouring the candidacy of the more anti-Beijing Tsai Ing-wen. Recent polls indicate that Tsai is in the lead, at 17 per cent ahead of more pro-Beijing opposition candidate Han Kuo-yu.

US-China tensions ease as trade deal is formalised 

As both sides are moving closer to reaching a trade deal, the timing of the agreement will likely favour Trump’s re-election campaign ahead of November 2020. The deal will greatly de-escalate the trade war between the two countries, which, besides causing diplomatic frictions between the two major powers, has rattled the global economy and caused trade diversion – or companies’ relocation of some operations to avoid tariffs – to South-East Asia. Bilateral trade ties will improve as US attention pivots away from contentious issues such as ally Taiwan’s elections and the governance of Hong Kong; both matters are likely to be resolved by as early as March 2020 and the nominee of the opposition Democratic Party is decided by June.

Likely fall of commodity prices will raise economic and protest risks in Mongolia ahead of elections

In Mongolia, it is likely that forecast falling commodity prices in 2020 (see graph below) will raise economic risks and the attendant likelihood of further anti-government demonstrations ahead of the country’s parliamentary elections, scheduled in June 2020. The price decreases are due to slowing global growth, including in China, which has been particularly impacted by the US-China trade war. Lower demand by China is also likely and will adversely affect Mongolia’s crucial extractives industry. This is because more than 90 per cent of Mongolian coal and copper exports go to China.


Beijing to hold off possible confrontations with Hong Kong protest movement until unrest subsides

In Hong Kong, months of often violent unrest have caused deep and abiding damage to the territory’s image as stable and secure financial, commercial, and tourist centre. Local government elections in late November indicated widespread public support for aspirations of the pro-democracy movement. The poll results placed the local administration in the position of having lost mass support in the territory while being obliged to adhere to the central government’s demand it brings Hong Kong back under control. The immediate pre- and post-election periods were marked by a dramatic reduction in street-level unrest throughout the territory, indicating a high level of cohesion and discipline within the leaderless movement. The next phase of the crisis largely demands on how Beijing assesses the risks and consequences of seeking a settlement through negotiation or by force. The former would represent a major concession while the latter would almost certainly lead to a resumption of confrontations between activists and an increasingly repressive police force. Non-violent options include the replacement of Chief Executive Carrie Lam by around March 2020 with a pro-Beijing interim executive that will lead the territory until 2022, as well as the enactment of anti-subversion legislation. However, Beijing is likely to hold off on any firm decisions regarding the territory’s leadership until the anti-government protest-related turmoil subsides, as it will not want to be perceived as conceding to pro-democracy protesters’ demands.

Southeast Asia

African Swine Fever (ASF) likely to continue to harm pork businesses

Outbreaks of African Swine Fever (ASF) will continue to devastate Asia’s huge commercial pig-rearing industry, inflicting enormous economic damage on the numerous small-scale family businesses raising a few hogs to supplement low incomes to massive combines providing hundreds of thousands of carcasses of pork each year. This threat to a key element in the national diet also challenges China’s ruling communist party, ever vigilant for sources of discontent that may erode its legitimacy. However, the implications of ASF extend far beyond Asia and other markets for pork products. The virus, which may take years to counter, has removed a major component from the global protein chain which most consumers expect to be replaced by other affordable meat-based foodstuffs – a demand that simply cannot be met.

Indonesian government’s decisions viewed as favouring country’s entrenched elite likely to fuel unrest

In Indonesia, President Joko Widodo’s decisive victory in the April 2019 general elections reflected a high degree of support from younger and urban voters for his emphasis of economic development and reformist agenda.  By the end of the year much of the enthusiasm Widodo had generated ahead of the polls had eroded following a series of decisions widely viewed as intended to benefit the country’s entrenched elite and been replaced by simmering anger among many who felt betrayed by his willingness to permit the return of the ‘old’ politics that rewarded wealth, connections and corruption. Widespread student protests in September triggered by the government reducing the power of a key anti-corruption agency and its move to placate traditional Muslim sensibilities by reversing reformist social policies point to future unrest based on generational and aspirational divisions, regardless of how successful Widodo’s development policies have improved the national infrastructure. 

South Asia

Modi government intensifies focus on boosting economic growth; risks raising social unrest 

India will garner a significant amount of attention from investors as Prime Minister Narendra Modi and his Bharatiya Janata Party intensify energy on boosting an economy that has slumped to its weakest growth in six years. 2020 will be the year of reforms aimed at reinvigorating key economic sectors such as in automotive, manufacturing and real estate. They will also make India an attractive destination for companies seeking alternatives to China, which is being damaged by a trade war with the US. Satiating the appetite of growing urban populations with high paying and highly skilled jobs will be a major challenge for the Modi government, but risks alienating rural communities, who are already feeling economically left behind potentially leaving them vulnerable to radicalisations. Modi's Hindu nationalist agenda has been disrupting the social fabric of the country, but the government endures and will continue to do so. Blowback will be at the street level in the form of periodic unrest and a rise in the terrorism threat. 

Pakistan and Afghanistan still unable to escape the orbit of major insecurity

Security, or rather insecurity, will continue to dominate the operational environment in Afghanistan and Pakistan. Peace talks in Afghanistan to end another cycle of a protracted conflict are likely to sputter along without yielding any substantive progress. Should Washington significantly downsize its troop commitments, then it will create more space and opportunity for extremely virulent militant groups to proliferate. In Pakistan, Prime Minister Imran Khan and his government will likely weather the multiple political challenges to his mandate as long as he still has the backing of the Pakistan military. However, relations will be tested particularly after the Supreme Court's ruling on cutting the term of the recent chief of army staff. This development will have profound impact on domestic politics, but also affect what is happening in the Afghanistan conflict. The export-driven economy, however, will be very sensitive to climate change factors and overall global trade. Bad crop yields, for example, from protracted dry weather and shorter but more intense rainy periods will cripple the vital agricultural sector. 


Europe & russia

Environmental concerns will act as a catalyst for business change 

As drier and hotter weather becomes the norm in large parts of Europe during summer, there will be increased regulatory and activist pressure on major CO2 emitters to take bolder action towards tackling climate change. Companies will also face internal pressures as the impact of volatile climatic conditions on operations and cost on production becomes clearer. The agricultural sector is one that is already deeply impacted by climate change, but extreme weather events will also expose vulnerabilities in manufacturing and supply chains. For instance, a drop in water levels of key rivers, including the Rhine, will jeopardise their use for cargo transport. 

In line with recent trends, consumer sensitivity towards environmental issues will grow, creating more incentives for businesses to better demonstrate their commitment to reducing greenhouse gas emissions. Shareholders are also likely to increase pressure on companies to commit towards decreasing emissions and integrate concrete commitments in corporate governance strategies. 

Several countries are likely to embrace ambitious climate goals, including through new legislation, in response. This has already been the case in Germany, where a new climate protection law passed through parliament in November, enshrining the government’s promise to cut greenhouse gas emissions to 55 per cent of 1990 levels by 2030. More ambitious policies could incur an additional cost on energy-intensive sectors, while major companies will likely be required to conduct climate change assessments.

Policy intrusion in the technology sector to grow as 5G technology proliferates 

Security concerns over the development of 5G technology will continue to grow among EU countries. The role of Chinese technology companies such as Huawei Technologies is likely to attract growing scrutiny, while the EU seeks to consolidate a unified position across the bloc. However, diverging interests and disproportionate levels of influence from other actors, including the US and China, will make this unlikely. Instead, countries will unilaterally decide on whether to allow foreign companies to provide equipment for 5G infrastructure, while others could seek to enhance existing powers to restrict or prevent Huawei’s involvement altogether. This will have implications on telecommunications providers who could face tougher requirements before sourcing products from vendors. 

Growing competition in the Arctic emerges as a source of geopolitical tension

Related to global warming, geopolitical tensions in the Arctic are likely to intensify due to competition over natural resources and territorial claims as the melting Arctic ices open up new trade routes and access to sea-bed energy sources.  In turn, a build-up of military activity as posturing exercises is likely, but the risk of miscalculation will usher in acute stages of belligerency.

According to the US Geological Survey, the polar region contains reserves equivalent to 412 billion barrels of oil, amounting to 22 per cent of global undiscovered oil and gas resources. 


As the country with the largest fleet of icebreakers, Russia, will leverage its position as the dominant power in the Arctic by asserting control over new waterways. China – despite not having the right to direct territorial claim in the region – will seek to expand its influence through significant investment in Arctic territories, such as Greenland which is in line with its official Polar Silk Road policy. The US will seek to counter both countries’ efforts in the Artic region, likely by enhancing its naval capabilities in the region and expanding its military presence both within its territory in Alaska and in allied countries.   

2020 will likely mark a new era for EU-Russia relations 

Next year will be crucial for EU-Russia relations, partly as a result of the recent de-escalation between Kiev and Moscow. France’s president, Emmanuel Macron, who has maintained constant dialogue with his counterpart, Vladimir Putin, will likely push for the EU to restore relations with Russia. However, beyond a reorientation from EU leaders, improving relations with Russia will also be contingent on the prospects of a stable peace deal in Ukraine. There have already been positive signals after the Ukrainian military and pro-Russia militia groups began withdrawing from contested areas in eastern Ukraine in October. Indications of improved relations will be Russia’s probable re-admission into the G7 and the lifting of current sanctions introduced over the 2014 annexation of Crimea and Moscow’s support for separatist militias in Ukraine’s eastern Donbass region. 

Countries in the Western Balkans pursue closer integration as EU membership prospects fade

In the Western Balkans, distrust with the EU will grow as prospects of joining the trade bloc begin to fade following repeated delays in initiating formal accession talks. Some countries will move closer towards integration – this has already been reflected through steps taken by Albania, North Macedonia, and Serbia to establish a common market, including freedom of movement of people and goods by 2021. The plans to establish a ‘mini Schengen’ area will improve cross-border travel and the transfer of goods. 

Meanwhile other major external players in the region – namely China and Russia – will seek to take advantage of the existing power vacuum to strengthen their influence. This will mean more investment, particularly in critical national infrastructure such as highways and railway lines, as the EU’s soft power in the region diminishes.  

Brexit materialises while its implications become clearer

The successful general election for Prime Minister Boris Johnson’s Conservative Party on 12 December will pave the way for the implementation of the new UK-EU agreement brokered in October. A stronger mandate means that Johnson will face little obstacles in passing through the Brexit agreement in parliament and increase government stability after a prolonged period of turmoil.

This also means that the Brexit process will enter the next stage – the transition period – until at least the end of 2020. While businesses will benefit from better clarity, many will continue allocating resources to implementing contingency plans. The UK’s future trading relationship with the EU will be determined through negotiations, likely to begin sometime in February if parliament approves the deal. In the meantime, the UK government will intensify negotiations for free trade agreements with third countries outside bloc although these are unlikely to offset the economic costs from more restricted market access to the EU. 


mena & central asia

Middle East and North Africa

Political unrest set to continue in 2020 across the region amid worsening economic conditions

Anti-government protests are likely across the region in 2020, especially as many governments in MENA have been unable to combat high rates of youth unemployment, while the rentier system many regimes have relied on, is no longer sustainable. Mass anti-government protests broke out this year in Algeria, Iran, Iraq, and Lebanon, with similar demonstrations taking place in Egypt, Jordan, Kuwait, Morocco, Tunisia and Turkey.

Governments across the region have implemented austerity measures throughout 2019 in order to wrest the downward slide of economic conditions and financial turbulence. In Iran, the government announced in November that it would increase fuel prices in response to US sanctions.

Another trigger for protests in the region will be the 10-year anniversary of the death of Tunisian fisherman Mohammed Bouazizi on 4 January which sparked the wider protest movement known as the ‘Arab Spring’. General dissatisfaction with living conditions was a key trigger in those protests, which eventually toppled several governments in the region. The anniversary is likely to add another layer of motivation for demonstrations who are dissatisfied with worsening living conditions.

A country which is highly likely to see a series of anti-government protests in 2020 is Egypt. The country is looking to secure a new IMF agreement in March, which will likely push the government of President Abdel Fattah el-Sisi to impose new strict austerity measures, amid of corruption allegations against his government. Widespread discontent against rising prices, alleged mismanagement of a water crisis, infrastructure issues, and youth unemployment currently standing at a high of 31 per cent, will likely increase civil unrest in the four-month outlook.

Political tensions are also expected to rise ahead of presidential and legislative elections in Iran, Israel, Jordan and Kuwait in 2020.


Perceived change of US policy in the region, set to de-escalate tensions between regional adversaries

Tensions between Iran and countries in the Gulf have dominated many headlines in 2019, with Tehran being accused by the West and most members of the Gulf  Cooperation Council (GCC) of conducting various attacks against the Saudi Arabian Oil Company (or Saudi Aramco) oil facilities in Saudi Arabia’s Eastern Province, and oil tankers in the Strait of Hormuz. However, recent indicators suggest the tensions between Iran and its traditional regional foes – Saudi Arabia and the UAE – could de-escalate in the six-month outlook.

In October, the UAE began releasing USD700 million of previously frozen funds to Iran. This reduces tensions with Iran and decreases the risk of direct confrontation with Iran-backed militias. Changes in national security personnel in Washington – particularly the departure of the former national security advisor, John Bolton, as well as the US's decision to withdraw its forces from northern Syria – have alarmed both Abu Dhabi and Riyadh, who fear that Washington is seeking to reduce US exposure to conflicts in the region. Thus far, Washington has dismissed rumours that it is considering decreasing its presence in the Gulf, with senior US officials stating that Washington is considering sending additional troops to the region, due to perceived threats from Tehran. 

Washington’s sanctions set to weaken Iran’s influence in the region in 2020

The US is likely to continue its ‘maximum pressure’ campaign against Tehran in 2020, which will continue to strangle Iran’s economy, particularly its oil export markets, the government’s main source of revenue. Many EU countries, including France and the UK, have allowed companies to trade with Iran without the use of US dollars in order to bypass sanctions imposed by Washington. So far, these have had little positive impact on the Iranian economy and its oil export market.

Washington’s campaign will potentially have destabilising effects for neighbouring countries such as Iraq and Turkey in 2020, who rely on Iran for their domestic energy needs.

Lastly, Iran’s political influence in the region is likely to decrease throughout 2020, especially as anti-Iranian sentiment continues to grow in nations such as Lebanon and Iraq that have traditionally had a favourable approach towards Tehran, especially due to their large Shia populations.  

Maritime risks remain in 2020 as conflict in Yemen continues to put assets in the Gulf at risk of attacks

Security and maritime risks will remain high in the Red Sea and the Strait of Hormuz in 2020, as the war in Yemen continues. Houthi rebels have continuously claimed responsibility for attacks on oil facilities, vessels, as well as seizing various ships throughout 2019 in order to inflict economic damage on both Saudi Arabia and the UAE. The Houthis have also threatened to continue to attack more oil facilities in Saudi Arabia and the UAE, if the Saudi-led coalition continues its military operation in Yemen.

Central Asia

Economic difficulties set to raise stability risks in 2020

Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan are set to face continuing economic decline that first began following the drop of oil and gas prices in 2014, raising the prospects of anti-government protests in 2020. Demonstrations have already led to a change in leadership in Kazakhstan this year, while protests have agitated the stability of autocratic regimes across the region.

The IMF has cut its growth forecast for the region to 2.3 per cent. This is due to the economies of Central Asian countries being dependent on the Russian economy, making it highly sensitive to movements of the Russian ruble. This is also because remittances from migrant workers in Russia are vital  to the Central Asian economies. In Uzbekistan for example, 15 per cent of the country’s economy is derived from the remittances.

The leadership in these Central Asian states have long relied on longstanding government subsidies in order to remain in power.

The economies of the region are reliant on the ruble, with the currency likely to continue to struggle in 2020. As a result, currencies in Central Asia will continue to depreciate, raising the price of basic commodities and leading to cuts in long-standing subsidies. This will increase instability, add another layer of grievance for the general public, and become a source of motivation for new anti-government demonstrations in 2020.

Anti-Chinese sentiment continue to grow in the region, due to Beijing’s growing influence

China’s continuing growing influence in Central Asia is also another factor why anti-government protest are likely across the region in 2020. Beijing has continued to increase its investments across the region as part of its Belt and Road Initiative (BRI).

There have been multiple protests against Chinese companies incited by Beijing’s treatment of the Uyghurs, a Turkic Muslim minority in Xinjiang Uyghur Autonomous Region in western China. Human rights activists estimate China is holding more than two million, predominantly Muslim Uyghurs, as well as other Turkic minorities in what Beijing calls ‘re-education’ camps.

A majority of Central Asian countries have relied on Chinese investment in order to offset losses incurred from declining oil prices. The continuing presence of Chinese companies and Beijing’s perceived influence in the region is set to fuel growing antagonism towards China, likely resulting in large-scale protests in 2020. 


sub-Saharan africa

Growing competition between world actors will fuel disinformation and uncertainty

Since 2018, there is renewed interest in Sub-Saharan Africa coming from new players in the Middle East, the Gulf, and Russia. Israel and the United Arab Emirates are playing catch-up with the likes of China, Europe, and the US, while Russia announced a salvo of new investments and contracts with African counterparts in 2019. The new entrants, some of which enjoy strong support from their home governments, are now challenging long-established business networks and narratives, most of which have been controlled by the West over the past five decades.

This trend will continue to intensify in 2020, with state support likely to increase. The intervention of state actors, such as China and France, in African politics is not new. France has traditionally seen its former colonies mostly in central and west Africa as its natural sphere of influence, but it is now seeking to expand its presence to new markets, including in Angola. Equally, China is often taken as the key example of an emerging economy challenging the post-British colonial context in East Africa and the Horn of Africa. In January 2018, French broadsheet Le Monde published an investigation alleging that Chinese operators, likely linked to the ruling Communist Party of China, had installed wiretaps at the African Union headquarters in Ethiopia’s capital Addis Abba. The Chinese government strongly dismissed the claims of a wiretap in a building that its contractors helped construct.

The renewed interest in the continent, following five years of disappointing GDP growth, is fuelling increased competition – both ethical and non-ethical – which is instantiated  by revelations at the end of October that Facebook had suspended 200 accounts it suspected were linked to Yevgeny Prigozhin, a wealthy businessman and ally of Russian President Vladimir Putin who is under US sanctions since September and who some media organisations refer to as  ‘Putin’s chef’. The accounts were targeting audiences with fake news across the continent, including in Madagascar and Mozambique, as well as Côte d’Ivoire, which is holding a presidential election in 2020. In June, Israeli news reports alleged that cybersecurity company Black Cube – which apparently had links to Israel’s external intelligence service, Mossad – had spied on the opposition during presidential elections in the DRC last December. Such campaigns not only render security and political risk assessments more complicated due to compromised information, they present security risks to companies and staff operating in the region as business spheres tend to be dominated by political elites.

Political spheres are not the only likely targets in such campaigns, and it is likely that commercial considerations, due to competition between companies, are also driving some of the disinformation; the suspicious accounts that Facebook suspended were largely sharing articles published by Sputnik, a news source that is widely recognized as being controlled by the Russian state and which commonly takes an anti-Western stance in its reporting. Ultimately, that could cost companies critical investments, and pose a security risk to staff, due to potential protests targeting operations as a result of ‘fake news’ being circulated. For instance, in Zambia, there are indications that anti-Chinese sentiment, including xenophobic attacks against expatriate Chinese workers, has increased over the past five years, in part fuelled by fake claims by some local opposition politicians and unfounded rumours. This was the case during anti-Chinese riots in December 2018, for instance. Local communities in Madagascar have also taken to the streets in protest against new foreign investment, apparently due to damaging campaigns on social media which alleged serious environmental degradation. Directors and senior managers with a regional remit should factor this into their security threat assessments when deploying staff.

National elections will increase risk of instability in wider sub-regions

The disinformation campaigns are highly likely to play out during critical elections in Côte d’Ivoire, Ethiopia, and Guinea-Bissau, which will see the outcome of its run-off presidential election play out at the beginning of January. Not only will such campaigns fuel insecurity prior to, during, and after the polls, they also threaten the broader stability in their surrounding regions.

In Côte d’Ivoire, incumbent President Alassane Ouattara faces a fragmented political field and changing political alliances, which increases overall political uncertainty. This makes planning and design of investment strategies more difficult, and more vulnerable to unscrupulous fake news. In Ethiopia, such campaigns can do a lot of damage to overall security and stability in the coming year, as animosity between the country’s main ethnic groups continues to simmer, with periodic bouts of violence. They also complicate longer-term investment planning as information is compromised, adding greater risk to new market-entrants. Although elections in Uganda are not due until 2021, President Yoweri Museveni is likely to take steps to limit dissent by arresting opposition politicians and civil society activists. This poses an incidental risk to corporate travellers and in-country staff working with such organisations. Equally, pre-electoral campaigning will increase in Ghana, where the government has improved budget consolidation but struggles to solve the indebtedness of its state-owned power utilities.

Debt levels will ease, but vulnerabilities to external shocks remain high

Meanwhile, the risk of debt distress amid slowing global GDP growth and trade friction will also remain high in Eritrea, Ethiopia, Kenya, Mozambique, South Africa, Sudan, and Zimbabwe. While such concerns are mainly likely to delay major infrastructure projects in Kenya and Mozambique, they pose a greater risk to stability in countries like Sudan and Zimbabwe, whose economies are in a pitiful state. Companies considering market entry should factor such medium-term risks into their longer-term investment plans.


Islamist threat in the Sahel proliferates as terrorists regroup

Finally, Islamist non-state armed groups (NSAGs) loyal to al-Qaeda and Islamic State (IS) have continued to expand their operational presence and have conducted increasingly sophisticated attacks against military targets. While exacerbating the overall security outlook, this also poses serious stability risks in Burkina Faso and Mali. It is probable that the death of IS founder Abu Bakr al-Baghdadi fuelled the intensification of attacks and a multiplication of claims of responsibility by Sahel-based groups, but also from NSAGs in the DRC and Mozambique, where Islamist groups have also intensified their campaign of violence in 2019.