Global stability is threatened by a "shaky" geopolitical outlook, risk analysis business Verisk Maplecroft has warned, particularly as US President Donald Trump's "wildcard" policies and unpredictability persists.
In its report Geopolitical Risk Outlook, the firm described Trump as a "lynchpin" for global stability and uncertainty regarding his foreign policy as a "geopolitical wildcard".
Highlighting Trump's approach to Syria and the Korean peninsula, Verisk Maplecroft's managing consultant Arun Pillai-Essex said: "Predictability in foreign affairs may not always be a virtue. But Trump's lack of it will continue to trigger spikes in geopolitical tensions during his presidency."
The analysis follows the biggest jump since Trump's election in CBOE's Volatility index on Wednesday, as rising political tensions in the States spooked investors.
The report noted that while Russia is currently adopting a "wait and see" approach to Trump's policies, it expects the Kremlin to "test US resolve" in the foreign policy soon.
Trump's 'America First' energy policy is also causing concerns for Middle East producers, the report said, as they battle low prices and the need to increase social spending to stave off unrest.
In addition, tighter monetary policy from the Federal Reserve is increasing political risk in emerging market nations with significant external credit liabilities, it said.
In Europe, while new president Emmanuel Macron is set to be a stabilising force, the European Union remains at threat from anti-establishment parties, leaving key powers just four years to reform the union or ultimately collapse, according to the report.
"However, carrying out the far-reaching changes outlined above is extremely difficult, particularly while anti-establishment parties are sniping from the side-lines and limit the room for manoeuvre of incumbent governments," said Florian Otto, Verisk Maplecroft's head of Europe and Central Asia.
"It is therefore much more likely that European governments will continue to muddle through and reform around the edges. They will do this at their own peril."
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