Social risks have increased around the world, mainly due to the rising cost of living. The gap between advanced economies and emerging markets has also widened further. This is the outcome from our latest report on the Social Resilience Index.

12 indicators were used to measure the economic and social resilience of 185 countries. Compared to 2021, the index fell by 2.1 points in 2023. This average is also almost equal to that of Belgium (-2.2 points), which is narrowly in the top 20 of the most efficient'. Denmark tops the list of most socially resilient countries, followed by Finland and Switzerland. The neighbouring country, the Netherlands, which has seen the greatest improvement of all Western economies, enters the top 10. The Grand Duchy of Luxembourg is in 7th position.

Johan Geeroms, our Director of Risk Underwriting Benelux: “The indicators used for the index range from political stability, employment rate, income inequality, trust in government and planned public spending for the education, health, social security… The increase in risks and social unrest has a considerable impact on the economy. Globally, the situation has deteriorated and we believe this negative trend will continue.”

Johan Geeroms insists on the particularly busy electoral calendar in 2024 and the increasing likelihood that political unrest will undermine the global economy. Social unrest deters investors. Many regions are facing increased conflict and political instability. Next year, 75% of global GDP will go to the polls, including the United States, the European Union and India. This means uncertainty, which is never good for the economy. The risk of disruptions and barriers to trade is only growing.

Our report indicates that the gap between the poorest and richest has widened in Belgium (5 points), the Netherlands (3 points), Spain (2 points) and Germany (1 point). At the same time, the gap was relatively limited in France and the United Kingdom (around 0.1 points in both countries).

This observation is important. In Belgium, there is a link between the wage index and inflation, but if energy prices rise again in 2024, it will mainly be lower incomes that will be affected. Because there is then less money available for basic needs and quality of life.

Inflation in Belgium is currently at a favourable level of 0.36% at the start of November due to the fall in energy prices, but this is only temporary and gives a misleading feeling of security. In addition, this rate only concerns the period from October 2022 to October 2023, which does not include the period from November 2023, with a higher inflation rate.

The increase in prices of basic necessities (food, housing, means of transport and health) therefore mainly affects low-income households. This can be a source of increased social unrest.

Indeed, food prices are catching up in Belgium after the food retail sector failed last year to pass on the increase in energy, production and personnel costs to the basket. consumers. For example, in 2022, the purchase prices of food and the costs of packaging of all kinds for supermarkets will increase significantly. They have failed to fully reflect these costs in their prices.

In 2023, purchase prices are considerably lower on international markets (even if they remain relatively high in nominal terms compared to the pre-war situation). But the supermarkets have not lowered their selling prices. On the contrary, they caught up in 2023 to recoup their lost 2022 profit margins.

The phenomenon of 'Cupideflation', when large companies take advantage of inflation to increase their prices and, at the same time, their profit margins, will therefore continue to hover over our heads in 2024 like a sword of Damocles. Added to this is the fact that people's mentality is so programmed that they expect inflation to rise and everything to become more expensive anyway.

The report shows that countries that rely on food and fuel imports are likely to experience the greatest increase in social unrest. The opposite effect can be seen in commodity exporting countries such as the United Arab Emirates, Qatar and Kuwait. These rise sharply in the index.

All advanced economies are in the top 50 of the indexes. In all these countries, we see that civic participation is relatively well developed. Engagement and a sense of community are important buffers against social unrest.

A new threat to social resilience is the rise of artificial intelligence (AI), which could lead to significant job losses. Of course, it also offers opportunities. But even advanced service economies will need to step up their efforts to keep up with technological acceleration.


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