Terrorism increases risks while economic growth improves risks

It said, in the past 12 months, global fatalities from acts of terrorism have risen 30% compared to the previous five-year average, according to its new security monitoring. The Maplecroft Terrorism and Security Dashboard (MTSD) is a new interactive mapping platform, which logs, analyses and plots all reported incidents of terrorism, piracy, political violence and human rights abuses by security forces down to 100m worldwide. It also draws on Maplecroft’s seven years of global data to reveal terrorism and security trends across 197 countries. Globally, the MTSD recorded 18,668 fatalities in the 12 months prior to 1 July, up 29.3% from an annual average of 14,433 for the previous five years. In the same period, the MTSD recorded 9,471 attacks at an average of 26 a day, down from a five-year average of 10,468, revealing that terrorist methods have become increasingly deadly in the last year.hideThe MTSD classifies 12 countries as ‘extreme risk’, many of which are blighted by high levels of instability and weak governance, with Libya in 10th place. However, Maplecroft said it should be of particular concern for investors that the important growth economies of Nigeria (fifth) and Kenya (12th) also feature in the category. “Libya, Kenya and Egypt are among a handful of countries to witness a significant increase in risk in the MTSD—and investor confidence in key sectors, including tourism and oil and gas, has been hurt,” stated Jordan Perry, a principal political risk analyst at Maplecroft. “When faced with rising security costs and decreasing safety for their personnel, companies can, and do, reconsider their country-level commitments.” With terrorism incidents in Libya doubling in the last year, militia violence is having a toxic impact on the country’s economy, especially its crucial oil sector, which has all but ground to a halt following blockades of the country’s main oil ports by rebel militias and divestment by multinational hydrocarbon companies. The flow of militants and weapons from Libya has also increased the risk of terrorism in Egypt (17th and ‘high risk’). Attacks in the Sinai Peninsula and Cairo reduced tourist numbers by 20% in May compared to the same month last year, while frequent bombings of the gas pipeline in North Sinai have impacted exports and government revenues. Tourism in Kenya (12th), which accounts for roughly 12.5% of GDP, has also been hard hit, due to the increasing frequency and intensity of terrorism attacks by Somali-based Islamic militant group al Shabaab. June 2014 represented the bloodiest month since the Westgate shopping mall attack on 21 September, 2013, with 69 fatalities and at least seven wounded. A single al Shabaab attack on Mpeketoni village, in Lamu County, on 15 June was responsible for 48 of these deaths. Despite the deteriorating security situation, Kenya’s strong showing at its US$2bn debut Eurobond in June 2014 highlights continued investor interest in the country. An intensifying campaign of violence by Islamic militant group Boko Haram has seen Nigeria (fifth) record by far the highest number of fatalities per attack, reflecting the intensity of the violence there. The country has been host to 146 reported attacks in the period from 1 July, 2013 to 30 June, 2014, resulting in 3,477 killed—an average of 24 people killed per attack, compared to two deaths per attack in Iraq. The increased capacity of Boko Haram—as illustrated by attacks on the key centres of Abuja and Lagos in June 2014—is likely to lead to a further loss of investor confidence in Nigeria’s ability to respond to security risks in the country. Meanwhile, there was better news for Nigeria from Euler Hermes, which has upgraded 11 countries’ risk ratings including Côte d’Ivoire and Nigeria. “Global GDP growth is expected to pick up slightly in 2014 (+2.8%), though the pace of the recovery should remain below 3% for the third year in a row,” said Ludovic Subran, Euler Hermes’ chief economist. Emerging markets remain crucial contributors to global growth (+4.3% in 2014), despite slowing growth outlooks for several large economies such as Brazil, China, Russia, South Africa and Turkey. In Africa, Euler Hermes upgraded Côte d’Ivoire to D3 from D4. Recovery has gained momentum, reflecting improved political stability. Foreign exchange reserves and import cover are nominally comfortable and external debt ratios and servicing are low, following debt forgiveness and rescheduling initiatives. Nigeria has been upgraded to D3 from D4. External liquidity and debt indicators in Africa’s largest economy have improved to comfortable levels and GDP growth is robust, resulting in improved short-term risk. However, a number of vulnerabilities continue to weigh on medium-term prospects, including personal and corporate security risk and a weak business environment.

Terrorism increases risks while economic growth improves risks

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