Like a tornado sweeping across the planet and touching down with little predictability, deep economic anxieties are leaving a trail of political turmoil and violence in poor and rich countries alike.
In debt-ridden Kenya, protests over a proposed tax hike last week left dozens dead, demonstrators kidnapped and a partially burned parliament building.
Meanwhile in Bolivia, where residents lined up for gasoline because of shortages, a military general led a failed coup attempt, saying the president, a former economist, must “stop impoverishing our country,” just before an armored truck rammed the presidential palace.
And in France, after months of road blockades by farmers angry over low wages and rising costs, the far-right party gained support in the first round of snap parliamentary elections on Sunday, bringing its long-taboo brand of nationalist, anti-immigrant politics to the threshold of power.
The causes, context and conditions underlying these disruptions vary widely from country to country, but there is a clear common thread: rising inequality, declining purchasing power and growing anxiety that the next generation will be worse off than this one.
The result is that citizens in many countries facing a bleak economic outlook have lost faith in their governments’ ability to cope and are fighting back.
The backlash has often been directed against liberal democracy and democratic capitalism, and populist movements have emerged on both the left and the right. “Economic malaise and political malaise feed off each other,” said Nouriel Roubini, an economist at New York University.
In recent months, economic fears have sparked protests around the world that have sometimes turned violent, including in high-income countries with stable economies such as Poland and Belgium, as well as those struggling with out-of-control debt, such as Argentina, Pakistan, Tunisia, Angola and Sri Lanka.
On Friday, Sri Lankan President Ranil Wickremesinghe singled out Kenya, warning: “If we do not establish economic stability in Sri Lanka, we could face similar unrest.”
Even in the United States, where the economy has proven resilient, economic concerns are partly to blame for the possible return of Donald J. Trump, who has frequently adopted authoritarian rhetoric. In a recent poll, a majority of American voters said the economy was the most important issue in the election.
National elections in more than 60 countries this year have put the spotlight on the political process, inviting citizens to voice their discontent.
Economic problems always have political consequences. However, economists and analysts say that a chain of events triggered by the Covid-19 pandemic created an acute economic crisis in many parts of the planet, laying the groundwork for the social unrest that is now blossoming.
The pandemic paralyzed commerce, wiped out revenues and created chaos in the supply chain that led to shortages of everything from semiconductors to sneakers. Later, when life returned to normal, factories and retailers couldn’t meet pent-up demand, driving up prices.
Russia’s invasion of Ukraine added another blow, sending oil, gas, fertilizer and food prices into the stratosphere.
Central banks attempted to control inflation by raising interest rates, which in turn further affected businesses and households.
Although inflation has eased, the damage has been done. Prices remain high, and in some places the cost of bread, eggs, cooking oil and home heating is two, three or even four times higher than it was a few years ago.
As usual, the poorest and most vulnerable countries were hit hardest. Governments, already strangled by loans they could not service, saw the cost of that debt soar as interest rates rose. In Africa, half the population lives in countries that spend more on interest payments than on health or education.
This has left many countries desperate for solutions. Indermit Gill, chief economist at the World Bank, said countries unable to borrow because of a debt crisis have essentially two ways to pay their bills: print money or raise taxes. “One leads to inflation,” he said, “the other leads to unrest.”
After paying a $2 billion bond in June, Kenya tried to raise taxes. But the situation spiraled out of control.
Thousands of protesters invaded parliament in Nairobi. At least 39 people were killed and 300 injured in clashes with police, according to human rights groups. The next day, President William Ruto withdrew the bill that included tax increases.
In Sri Lanka, where the debt is $37 billion, “people are broke,” said Jayati Ghosh, an economist at the University of Massachusetts Amherst, after a recent visit to the capital, Colombo. Families are skipping meals, parents can’t afford school fees or health care, and a million people have lost access to electricity over the past year because of unaffordable prices and tax increases, she said. Police have used tear gas and water cannons to disperse protests.
In Pakistan, rising flour and electricity prices triggered a wave of protests that began in Kashmir and spread to almost all major cities this week. Shopkeepers closed their shops on Monday, blocked roads and burned electricity bills.
“We cannot bear the burden of these inflated electricity bills and rising taxes any longer,” said Ahmad Chauhan, a pharmaceutical salesman in Lahore. “Our businesses are suffering and we have no choice but to protest.”
Pakistan is heavily indebted to a range of international creditors and wants to boost tax revenue by 40 percent to try to secure a bailout of up to $8 billion from the International Monetary Fund – its lender of last resort – to avoid default.
No country has a bigger IMF loan program than Argentina: $44 billion. Decades of economic mismanagement by a succession of Argentine leaders, including printing money to pay bills, have made inflation a constant struggle. Prices have nearly quadrupled this year compared with 2023. Argentines now use U.S. dollars instead of Argentine pesos for big purchases like homes, and stash wads of $100 bills in jackets or bras.
The economic crisis led voters in November to elect as president Javier Milei, a self-described “anarcho-capitalist” who has promised to cut public spending. Milei has eliminated thousands of jobs, slashed wages and frozen infrastructure projects, imposing austerity measures that go beyond those the IMF has sought in its attempts to help the country fix its finances. In his first six months in office, poverty rates have soared.
Many Argentines are fighting back. Nationwide strikes have closed businesses and cancelled flights, and protests have clogged squares in Buenos Aires. Last month, at a demonstration outside Argentina’s Congress, some protesters threw rocks or set cars on fire. Police responded with rubber bullets and tear gas. Several opposition lawmakers were injured in the clashes.
Martin Guzman, Argentina’s former economy minister, said that when national leaders restructure crippling government debt, the deals fall hardest on people whose pensions are cut and whose taxes are raised. That’s why he pushed for a law in 2022 that would require Argentina’s elected Congress to approve any future IMF deal.
“There is a problem of representation and discontent,” Guzman said. “That is a combination that leads to social unrest.”
Even the world’s richest countries are filled with frustration. European farmers, worried about their prospects, are angry that the cost of new environmental regulations aimed at preventing climate change is threatening their livelihoods.
Overall, Europeans feel that their wages do not go as far as they used to. Inflation reached almost 11 percent at one point in 2022, reducing incomes. About a third of EU residents believe their standard of living will decline over the next five years, according to a recent survey.
This year, protests have erupted in Greece, Portugal, Belgium and Germany. In March, on the outskirts of Berlin, farmers spread manure on a motorway, leading to several accidents. In France, they burned hay, dumped manure on Nice City Hall and hung the carcass of a wild boar in front of a labour inspection office in Agen.
As the head of France’s farmers’ union told the New York Times: “It’s the end of the world versus the end of the month.”
Economic concerns are increasing divisions between rural and urban dwellers, unskilled workers and the university-educated, religious traditionalists and the secular. In France, Italy, Germany and Sweden, far-right politicians have seized on this discontent to promote nationalist and anti-immigrant agendas.
And growth is slowing around the world, making it difficult to find solutions.
“Terrible things are happening even in countries where there are no protests,” said Ghosh, an economist at the University of Massachusetts Amherst, “but protests somehow wake everyone up.”
Aunt Ur-Rehman He contributed reporting from Karachi, Pakistan.
