From U.S. midterms to the heart of Europe: A year of election craziness poses major global risks in 2022

“Markets hate elections,” Australian financial services executive Paul Rickard, said in a note to investors last week. “In an election campaign, politicians can and do make “crazy” promises,” he says. “The risk is enough to make share investors wary.”

Rickard was talking about his own country, where spring elections could unseat Prime Minister Scott Morrison. But he might as well be describing almost every corner of the world in 2022. This will be the year of the vote—and markets could well hate it.

Elections in Europe, Asia, Latin America, and Africa—not to mention the U.S. midterms in November—could rattle markets, provoke mass unrest, and upend policies from taxes to climate change, China, and Big Tech. And those are just the elections we know about; unscheduled, snap votes are also called when governments fall apart—as they can do in terms of high stress. “Governments are under much more pressure than normal because of the pandemic,” says Famke Krumbmüller, executive director of EY’s Geostrategic Group tells Fortune. “Discontent tends to favor a change in government,” she says. “France, the U.S. Brazil: These will be very closely watched by the markets, and the outcome has the capacity to significantly impact business.

But those are hardly the only three elections ahead.

Right after new year, when Italian lawmakers select the country’s new president, a largely ceremonial position. The favored candidate is Prime Minister Mario Draghi, one of the European Union’s most respected managers, who, as former head of the European Central Bank, holds one of the highest approval ratings in the developed world. There’s a catch, however: a Draghi presidential selection would almost certainly collapse Italy’s governing coalition, prompting yet another election; governments there fall apart on average every 13 months. Still, a Draghi presidency “could be a political stabilizing factor the next seven years,” says Fitch ratings agency. The E.U.’s new power couple, Draghi and French President Emmanuel Macron, would help fill the vacuum left by just-departed German Chancellor Angela Merkel.

Macron, however, needs to win another five years in the Elysée Palace, in France’s two-round elections in April. Impressive pandemic handling and a thriving economy put him in strong position to assure reelection. Even then, Macron’s economic agenda, like streamlining hefty pension plans and loosening labor regulations, could stall. “The French population is unlikely to embrace painful reform after years of tough COVID-19 measures impacting daily life,” the Dutch bank ING warns. At least 10 rivals (so far) are fighting a sprawling, messy campaign, and last-minute plot twists could upend predictions; Macron, after all, crushed veteran politicians in 2017, at 38, to become president—his first elected job in office. Many left-wing voters, irked by Macron’s business-friendly politics and the highest inflation in a decade, vow they will stay home rather than vote for him, even if it could lead to far-right, president. “At stake in April, 2022, just like five years ago, is not just the Elysée,” says Giovanni Capoccia, politics professor at Oxford University, “but the future of the E.U.”

Foreign meddling

Europe’s future is also at stake in April elections in Hungary, where a knife-edge campaign pits far-right nationalist Prime Minister Viktor Orbán against conservative small-town mayor (and former resident of Toronto and New Castle, Indiana) Peter Marki-Zay. E.U. officials would celebrate Orbán’s ouster after 11 years; he has made Hungary the most Europe-hostile countries of the bloc’s 27 members. But foreign meddling—including from Trump allies in the U.S.—could give Orbán an edge. American conservatives will hold their CPAC conference in Budapest in March, in support of Orbán. And nuclear-power and railway deals, built with loans from China and Russia, give those countries a vested interest in Orbán’s victory. “Although Moscow and Beijing generally do not play a role in the elections of small Central European countries, Hungary could be an exception,” says Andras Racz, senior fellow for security and defense at the German Council for Foreign Relations. “Free and fair Hungarian elections are of crucial importance for the European and international order,” he says.

China’s global clout will also play a key role in South Korea’s elections in March to replace President Moon Jae-in, as will North Korea’s nuclear threat. Both the U.S. and China (South Korea’s major trading partner) have much at stake, as do 51 million South Koreans, of course, who have protested against corruption, rising housing prices, and unemployment. “One of the biggest concerns for South Koreans…will be electing a candidate who can revitalize the economy and stabilize their lives,” says Sang Kim of the Korea Economic Institute of America in Washington.

Voters in the Philippines could also shift the country’s politics significantly in May elections, when they pick the successor to President Rodrigo Duterte—another ally of Trump. Duterte’s aggressive tactics over six years have included sending hit squads to murder thousands of drug addicts, and jailing and prosecuting his critics, like this year’s Nobel Peace Prize winner Maria Ressa. Whoever wins in May will need to revive the pandemic-hit economy; the Philippines is the worst place to be in the pandemic among 53 countries, according to Bloomberg’s ranking. In a crowded field of candidates, the winner could be elected with just 25% of the votes, making it difficult to predict. “Major foreign investors need to understand how the next president will reward allies, penalize adversaries, and distribute power…and how these actions impact risks to their investments and local partners,” says Dereck Aw, senior analyst in Singapore for the consultancy Control Risks. Previous presidents, Aw says, “caused regulatory upheavals in sectors such as mining, energy and telecoms.”

Mass discontent over the pandemic impact has hit other election countries too: Kenya, with August elections, has seen rising unrest as its tourism industry has collapsed under COVID-19; and Colombia, where elections scheduled for May has already sparked protests. Lebanon, scheduled for May elections, has seen protests and despair over its collapsed economy.

And elsewhere, another close ally of Trump faces a shaky political future: Brazilian President Jair Bolsonaro, who faces a tough reelection battle against former left-wing leader Luiz Inačio Lula da Silva on October 2. Bolsonaro, taking a page out of Trump’s election playbook, downplayed COVID-19 and dismissed masking and mass vaccination, and told supporters only a rigged election will lead to his loss. “He has said that ‘only God can remove me,’” EY analyst Krumbmüller says. “I see a lot of tension in the months leading up to the elections, and afterwards, if he doesn’t accept the results.”

All that will sound familiar to American voters, who go to the polls on November 8 to elect all 435 House of Representatives members and 34 of the 100 Senators—an election that could reshape the agenda for years in the world’s biggest economy, if Republicans gain control of one or both chambers, giving them the power to block President Joe Biden’s economic plan, and potentially further cement the conservative majority on the Supreme Court. All of which leads plenty of election uncertainty for markets to hate.

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