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Trump’s protectionism fuels political risk: Aon

President Donald Trump’s protectionist stance is likely to worsen global political risk, according to Aon’s annual Political Risk, Terrorism and Political Violence maps.

His outlook carries implications for the Asia-Pacific region, where open trade with the world’s biggest economy remains crucial to growth.

“The policies being proposed by the US administration are expected to impact a range of policy areas that are important for political risk in the [emerging markets] world, including immigration, tax, exchange rates and international trade and investment,” Aon says.

“Populist policies tend to include trade and investment restrictions, greater government spending and lower taxes, resulting in wider fiscal deficits and restrictions on immigration.

“Overall, these, along with the potential for reactions from other major economies, would likely lead to an increase in political risk in many of the countries the risk map covers.”

Aon Risk Solutions Executive Director, Head of Structured Credit and Political Risks Sarah Taylor says it is more important than ever for businesses to understand and mitigate exposures to political risk.

“The changing global landscape, driven by trade protectionism, populist policies and sanctions, is likely to have a significant impact on emerging and frontier markets,” she said.

The world has become “more violent and uncertain”, with the number of terrorist attacks rising 14% to 4151 last year compared with 2015, according to the maps.

Attacks in Western countries almost tripled to 96 last year.

“The evolving threat in the West also continues to be defined by the intent of terrorists, particularly [Islamic State], to inflict maximum casualties by whatever means are available, increasingly resorting to vehicles, firearms or edged weapons,” Aon says.

“The impact of the threat in terms of business losses continues to shift away from property damage to business interruption and loss of life.”

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