Yoel Sano, head of Global Political and Security Risk at BMI, a Fitch Solutions company, speaks with Global Finance about the most prescient warnings heading into 2025 and beyond.
Global Finance: How has rising inflation impacted your country scores?
Yoel Sano: Higher inflation generally means higher risk of social instability. When Russia attacked Ukraine, we saw an immediate inflation spike; the cost-of-living crisis went global. Rising food prices were one of the major factors that disrupted social stability. In terms of the impact, it depends on the country’s macroeconomic backdrop, including import bills, dependency on imports, fiscal position and debt position. In Sri Lanka, President Gotabaya Rajapaksa was toppled in 2022. In Argentina, they elected Javier Milei, a radical sort of free marketeer, late last year to fix triple-digit inflation. We currently have anti-inflation protests erupting in Nigeria. So, the impact manifests itself in different ways. The most extreme cases lead to sudden changes in government, or it could be a slow-burn ejection of a government like we saw in Argentina. Or it could just be sort of sporadic unrest like we see in Nigeria.
GF: Do organized disinformation campaigns affect political analysis?
Sano: Our analysts obviously monitor Twitter [now X] throughout the day to sort of see what news is available. But we also look at the mainstream international outlets from a variety of different sources. It can be hard to verify information. It is often somewhat tricky to absolutely be sure about what happens, for example, in wars like Ukraine and Gaza. The quantity and speed with which information is disseminated makes a lot of noise, so we just have to work our way through it. There are fact-checking organizations, but some may be unreliable themselves. It’s a case of perseverance and trying to see through the fog. But certainly the onset of disinformation can cause situations to erupt quite suddenly. I’m based in the UK. Just in early August, we’ve seen riots by anti-immigrant, far-right activists, which seem to have been triggered by false information concerning the identity of the murderer of three young girls at a dance party. The false aspect of the story had been debunked, but the underlying sort of aggression is still there—it’s still a risk. Those kinds of incidents, where you have a sudden piece of disinformation thrown up, can trigger unrest that will probably be more common going forward. I’d say it’s about the speed of disinformation, and in some ways the volume level as well, than the amount of disinformation.
GF: What’s your outlook for the major Latin American markets?
Sano: We’re quite positive on Mexico’s economy in the long term as an alternative to, say, China. Mexico can bring more manufacturing and business operations to market, as it is geographically closer to the US and perhaps more politically reliable under President-elect Claudia Sheinbaum [she assumes office on October 1]. Sheinbaum is quite a capable, technocratic-type leader who would maintain Mexico’s stability.
In Brazil, there’s a lot of uncertainty about who will succeed Luiz Inácio Lula da Silva. We have municipal elections in October; that’ll be a test for Brazil’s 2026 presidential election. And we know that ex-President Jair Bolsonaro cannot run for the presidency in 2026 due to his own legal challenges. So, the Brazilian right will be looking for a new standard bearer for the 2026 presidential election. We’re watching that very closely.
In Argentina, Milei’s main test will be the midterm elections in October 2025.
In Venezuela, we are seeing the challenges against President Nicolás Maduro, who seems to have retained the support of the military and key institutions. He seems to be able to ride out the protests, but it depends how big any protests become. In order for any leader to be deposed, you need to have protests for weeks, maybe months on end. And even that doesn’t completely guarantee political change because we’ve seen, in 2020 in Hong Kong and Belarus, large protests went on for months and the governments stayed put.
Peru has been a country where we’ve seen almost chronic instability for quite some time now. General elections are scheduled to be held in April 2026. In Ecuador, there’s a lot of drug-related violence. In Bolivia, there seems to be a power struggle within the ruling Socialist movement. They have elections in 2025.
Chile also has elections next year in Latin America. So, again, this will be a test of whether the current center left will retain the presidency or whether the right will come back to power. I know that President Gabriel Boric has faced a number of problems. He has faced constitutional amendments being defeated by referendums, so he has had quite a turbulent presidency thus far.
GF: Will China continue to wield influence in Latin America?
Sano: I think there are a lot of avenues for uncertainty regarding China’s influence on parts of Latin America, where China is a major commodity importer. Milei’s predecessor, Alberto Fernández, signed Argentina up to join BRICS. Milei immediately withdrew Argentina from BRICS when he was elected president. He’s now trying to mend ties with China. But it shows that you can’t assume that just because there’s a sort of China-friendly government in place at one time, it’ll always be the case. Overall, trade is an area where China will remain important for Latin America.
GF: What key strategy would you offer to CFOs to manage risk?
Sano: You must have some sort of backup system or resiliency plan to deal with disruption to any operations. For example, several months before the Covid-19 pandemic began, BMI started giving all its staff laptops, replacing traditional PCs. A few weeks before we went into lockdown, we conducted a test situation where we all worked from home—just to see how that would function. When the lockdown actually happened in March 2020, we were ready and able to maintain continuity of business. Imagine if this had happened 20 years earlier, without all this infrastructure. So, it’s important for companies to have backup systems, particularly in this era of cyberthreats.
It also depends on what business you’re in. With international shipping businesses, the Houthis of Yemen started attacking shipping vessels in the Red Sea in late 2023. Freight was rerouted around the Cape of Good Hope in Africa. Yes, it was more expensive and more time consuming, but at least there was an alternative. I think building redundancy in any kind of system is useful.
If you’re a major manufacturer, you don’t want to be reliant on a single source for your components, and you’d ideally want to ship your material from multiple countries so there’s not a single point of failure.
GF: Any surprises in the months since BMI held its last annual “World of Worries” Q&A event?
Sano: Our analysts do these global/macro risk assessments on a global basis and on a regional basis, discussing themes for the coming year. What surprised us in 2024? The Israel-Hamas war in Gaza has gone on a little longer than we expected. I would also say that you can’t predict events like the death of Iranian President Ebrahim Raisi in a helicopter a few months ago and centrist Masoud Pezeshkian winning a snap election. We couldn’t predict that former President Donald Trump would be shot, but we did flag the possibility of the coming US election being conducted without either Donald Trump or Joe Biden on the ballot, either due to Trump’s legal difficulties or Biden’s age. So, we’re correct—in that sense—about the Biden age issue. There will always be something that happens, catching us off guard from time to time. We’re holding another “World of Worries” event on October 9, with much of the focus on risks in 2025.
