Financial sector players are likely to re-assess political risks in emerging markets, especially, against the backdrop of rising political turmoil in the Middle East and North Africa, says a report. “In the long term, banks, insurance companies and businesses are likely to re-assess and re-price political risk in emerging markets,” the Dun & Bradstreet report said.
According to the report, in the wake of uprisings in Tunisia, Egypt and Libya, the credit and insurance costs are expected to climb not only in MENA (Middle East and North Africa) but “also in other unstable and/or authoritarian countries”.
Meanwhile, emerging markets such as India and China are leading the global economic recovery, whereas most of the developed nations are witnessing sluggish growth prospects.
“Europe’s sovereign debt crisis also strengthened this view, as markets started to consider advanced economies such as Greece and Ireland more risky than many countries in Asia or the Middle East”, the report said.
Emerging economies must resort to careful monitoring of political and economic situation in the MENA region, and resort to alternative sourcing and stockpiling in order to minimise supply chain disruptions arising out of these disturbances, it added.