Economic Anxiety Ignites Global Unrest: From Kenya to France, People are Fighting Back
Across the globe, a wave of economic anxiety is washing over nations, leaving a trail of political turmoil and violence in its wake. From protests sparked by tax hikes in Kenya to a failed coup attempt in Bolivia, the economic woes of the past few years are pushing citizens to the brink. The common thread running through these disruptions: rising inequality, diminished purchasing power, and a growing fear that the next generation will face a bleaker future than the current one.
Key Takeaways:
- A Global Crisis: The Covid-19 pandemic, coupled with the ongoing impact of Russia’s invasion of Ukraine, has created a perfect storm of economic instability.
- Debt and Inflation: Many countries, especially developing nations, are burdened by unsustainable debt and skyrocketing inflation, making basic necessities like food and energy unaffordable.
- Unrest and Protests: From Kenya and Sri Lanka to Argentina and Pakistan, citizens are taking to the streets with protests that have turned violent in some instances.
- Political Consequences: This global economic unrest is leading to a rise in populism and a loss of faith in liberal democracies.
- The Warning Signs: Economists warn that these economic anxieties are a potent force that could further erode political stability and ignite more widespread unrest.
A perfect storm of instability:
The COVID-19 pandemic initially brought the world economy to a standstill, leading to widespread job losses and supply chain disruptions. As economies began to recover, pent-up demand fueled inflation, making everyday goods progressively more expensive. The war in Ukraine further exacerbated the situation, sending oil, gas, fertilizer, and food prices soaring. Central banks, in an attempt to curb inflation, have been raising interest rates, further squeezing businesses and individuals.
While inflation has eased in some regions, the damage is already done. Prices remain high and in many places the cost of basic needs like food and fuel are two, three, or even four times higher than just a few years ago.
The burden falls heaviest:
This economic instability has impacted countries worldwide, but the brunt of the burden is being felt by the poorest and most vulnerable. Developing nations grappling with unsustainable levels of debt saw their economic woes exacerbated by rising interest rates. In Africa, half the population lives in nations where interest payments on debt are exceeding government spending on healthcare and education.
Desperate for solutions:
Many countries are caught in a difficult position: they need to pay their bills, but the options are limited. Indermit Gill, the chief economist at the World Bank, points out that countries facing a debt crisis have two main options: printing money or raising taxes. Printing money leads to inflation, while raising taxes can spark social unrest.
This is precisely what has been happening in several countries. Kenya, facing a $2 billion bond repayment in June, tried to raise taxes through a new bill. The resulting backlash was swift and violent. Thousands of protesters swarmed the Kenyan Parliament, leading to the deaths of at least 39 people and the injury of over 300. This led the Kenyan President, William Ruto, to withdraw the proposed bill.
Sri Lanka, burdened by a staggering $37 billion in debt, has also seen widespread unrest. Families are struggling to make ends meet, skipping meals and struggling to pay for basic necessities like education and healthcare. The economic crisis has resulted in over a million people losing access to electricity due to unaffordable price increases. The government has resorted to teargas and water cannons to disperse protesters.
Echoes of unrest across the globe:
The economic anxieties are not limited to countries grappling with massive debt. Pakistan, struggling with soaring costs of flour and electricity, has seen protests erupt in Kashmir and spread to major cities.
Argentina, holding the world’s largest IMF loan program at $44 billion, has been battling inflation for decades. The economic crisis led to the election of Javier Milei, a self-described anarcho-capitalist, who promised to slash government spending. His austerity measures, while intended to address the economic issues, have led to rising poverty and sparked a wave of protests. Argentina’s residents have taken to the streets, blocking businesses, canceling flights, and engaging in violent altercations with the police.
Even the wealthiest countries are not immune:
Economic frustration is bubbling up even in developed nations. European farmers, facing rising costs and environmental regulations, are feeling the pressure. Many believe their livelihoods are threatened, and protests have erupted across Greece, Portugal, Belgium, and Germany.
Overall, economic anxieties are adding to the existing divisions within societies. The gap between rural and urban areas, skilled and unskilled workers, and religious and secular populations is widening. In France, Italy, Germany, and Sweden, far-right politicians are capitalizing on this discontent, promoting nationalist and anti-immigrant agendas.
A wake-up call:
Experts warn that the global economic anxieties are a potent force that could erode political stability further and fuel more widespread unrest. Jayati Ghosh, an economist at the University of Massachusetts Amherst, emphasizes that protests are a wake-up call for nations struggling with economic issues. As the global economy slows down, finding solutions to these challenges will become even more difficult. The world needs to acknowledge the rising economic anxieties and take proactive steps to address them, before they further destabilize societies and trigger more destructive consequences.
