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ARTICLE · 03 JANUARY 2024

How Will The Debt Crisis Impact Countries' Political Stability?

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As featured in our Autumn/Winter 2023 Political Risk Index, find out more about the alarming implications for political stability due to the current emerging market debt crisis.

GlobalGovernment, Public Sector
Sam Wilkin
Sam Wilkin

Executive Summary

In early October 2023, Oxfam put out a press release with the headline, "world's poorest countries to slash public spending by more than $220 billion in face of crushing debt." This headline has alarming implications for political stability, considering that austerity and unrest have been shown to have a strong correlation. In general, despite dramatic examples in Ecuador and Sri Lanka, austerity appeared to play a relatively small role in global protest in 2022 and 2023, when nearly 80% of countries either held government spending constant or increased expenditures. 2024 appears likely to be a different story, as governments struggle to manage unsustainable debts. The current emerging market debt crisis could be compounded by social unrest.

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