An expected surge in post-pandemic political and civil unrest could hamper international trade in the coming years, new research warns, with exporters in emerging markets anticipated to be some of the worst affected.

Credit insurer Coface says in a new report that the socio-economic damage wrought by the Covid-19 pandemic is likely to lead to a “new wave” of mass movements, such as protests, in countries globally.

In turn, it predicts there will be “significant” economic repercussions for affected nations, most likely emerging markets, affecting both their domestic output and foreign trade activities.

Drawing on data from more than 20 countries affected by large-scale civil unrest from 2011 to 2019, including Algeria, Brazil and Ukraine, Coface says exports are acutely impacted in the year such action takes place.

It estimates that exports are on average 4.2% lower than they would have been had such movements not occurred, then remain roughly 6.3% and 8.9% below their potential in the following years.

The latest figures come as experts warn of a rise in social and political risks globally due to deteriorating socio-economic conditions.

Coface says that its own social pressure index reached an all-time high in 2020, up from 46% to 54% globally. In emerging countries alone there was a rise from 54% to 61%.

Declining living standards as a result of a drop in GDP per capita, falling purchasing power due to rising unemployment and inflation, as well as widening wealth disparities are helping drive this trend, Coface says.

Researchers tell GTR that in the coming year, exporters could be affected in regions where social risks are currently high, including South and South-East Asia, North Africa and Latin America. Large at-risk nations include Brazil, Mexico and Peru.

“The recent protests in Colombia, for example, appear to have affected exports. In the first month of the protests, in May 2021, they were nearly 17% below their pre-pandemic level in May 2019.”

Addressing the reasons why civil unrest can depress trade levels, the report notes that the “uncertainty associated with political instability increases the transaction costs between the affected country and the rest of the world, and reduces the incentives to enter in new trade relationships or to maintain existing ones”.

“Trade flows slow down or even contract: the fall in industrial activity disrupts exports and the fall in consumption affects imports,” it adds.

Imports are generally less affected, however, while the shock to exports depends hugely on the persistence and intensity of a mass movement – for instance, whether protests are violent – as well as its demands or intentions.

“Movements with purely political demands have, on average, transitory and weaker effects on exports and imports, which return to the trajectories they would have followed in the absence of the shock three and two years after the movement, respectively,” the report reads.

“On the other hand, movements that include socio-economic demands have, on average, longer lasting and stronger effects. Three years after the shock, exports and imports remain 20.7% and 5.6% below their potential, respectively.”

As post-pandemic movements are more likely to be motivated by the deterioration of socio-economic conditions, rather than purely political demands, Coface suggests disruption to trade could be at the larger end of that scale.