Daily Management Review

Low Global Growth Call for Right-Wing Populists


Left-wing government are coming to power in order to slice-and-dice right’s legacy, rights - to compensate at least part of the "left turn" economic results. Weak and fragile global growth, future economic challenges of fringe countries can make fall of the pro-socialist regimes in Latin America beginning of the global trend, similar to the "Arab spring" 2010. However, there is nothing to celebrate in particular: right-wing populists around the world have more chances that the classical righties of the 1970s.

The right movement of the political sphere in Latin America, which seems to has quite clear economic reasons, still remains an isolated chain of events in 2015. In any case, a "right turn" in Europe did not happen. Even if it arose, then the non-economic "refugee crisis" in the EU would have brought a contribution much larger than the stagnation of incomes and ultra-low economic growth in 2013-2015.

Nevertheless, in 2016, there are reasons to expect events wich scale might well resemble the "Arab Spring" in 2010. Not only Latin American periphery of the world economy, but also other "developing countries" in the broadest sense, from Turkey and Indonesia to Hungary and the BRICS countries (with the possible exception of India), are waiting for a slowdown or even a recession in the next year. Besides, there as well may be repatriation of the US and European capital in the new global centers of growth (among which the US is in the first place, where the Fed has just started raising the key rate in December 2015). Political consequences are expected, too: the Latin American "right turn" can happen essentially anywhere.

As an example from the oil-producing countries, there is Saudi Arabia. The country tries its best to hold Riyal rate. In this sense, it is no worse than Azerbaijan, which devalued its Manat by more than 50% in one day in December 2015. Turkmenistan’s gas has been kept. The question "How did it do it?" is difficult to answer, because any questions about Turkmenistan are definitely difficult to answer. And also, there are Nigeria and Angola. The world’s part where governments faced falling revenues and multiple failures to leftist populism is very big.

It would have been okay, except for some reasons. A long cycle of high oil prices and accelerated development of the world’s institutional sphere in the last 15 years basically did not play in favor of the right wing. Right-wing populists are now almost everywhere, from South Africa to Indonesia, there are more popular than disparated classical right and lobbyists of business interests. Freedom of world trade and removal of barriers are a real trend in 2015. Possible "right revolution" may add here right-wing component, traditionalist prejudices and state capitalism.

based on Reuter's materials