This year, large-scale and long-lasting anti-government demonstrations have occurred in some developed countries where unrest is relatively rare, such as Canada and New Zealand. Additionally, coups and constitutional crises have sparked widespread protests in several emerging and developing countries. A series of recent IMF activities aim to understand the economic drivers and costs of such insecurity.
Social anxiety is difficult to measure consistently. The IMF’s Reporting Social Insecurity Index attempts to do this by counting media mentions of words related to insecurity across 130 countries. The proportion of countries experiencing large spikes in the index, which typically reflects large-scale unrest events, rose to around 3% in February. As this week’s chart shows, this is nearing its highest level since the start of the pandemic.
Before the pandemic, there was heightened anxiety around the world. Perhaps most notable was the wave of protests that began in Chile and swept parts of Latin America in October and November 2019. Also, around the same time, significant unrest occurred in the Middle East, particularly in Algeria, Iran, Iraq, and Lebanon.
At the beginning of the pandemic, anxiety declined sharply amid voluntary and mandatory social distancing. According to the IMF study, this is consistent with experience during past pandemics. However, social unrest has not completely stopped. The second and third quarters of 2020 saw several significant incidents of unrest, including large-scale racial justice protests in the United States. Ethnic tensions have become more pronounced in Ethiopia. Large-scale anti-government protests erupted in Brazil, Lebanon, and Belarus.
Social unrest continued into the later stages of the pandemic, with incidents occurring in both developed, emerging, and developing countries. In the former, protests have erupted in places where major social unrest is usually rare, but often with anti-government or anti-lockdown motives, such as Canada, New Zealand, Austria and the Netherlands. In emerging market and developing countries, the apparent motivations for recent unrest have been more diverse, such as anti-government protests in Kazakhstan and Chad. Burkina Faso coup. Regional protests in Tajikistan. and Sudan’s constitutional crisis.
causes and costs
In the coming months, two important factors are likely to lead to an increased risk of future anxiety. First, disincentives to pandemic-related protests may weaken as governments ease restrictions and public concerns about catching the coronavirus in crowds diminish. Second, public dissatisfaction with soaring food and fuel prices is likely to increase. The economic causes of civil unrest are complex and riots are very difficult to predict, but in the past they have been linked to rising food and fuel prices and frequent protests.
Rising social unrest could pose a risk to global economic recovery as it could have a lasting impact on economic performance. In a paper last year, IMF staff showed that instability can have a negative impact on the economy, as consumers fear uncertainty and production in manufacturing and services is lost. As a result, 18 months after the most severe outbreak of violence, gross domestic product is typically about 1 percentage point lower than it would have been otherwise.
So far, social unrest remains low compared to pre-pandemic levels, but protests are likely to increase further as pandemic-era restrictions are lifted and the cost of living continues to be squeezed. This can result in significant financial costs.