Unemployment fuels unrest and anger.
Political instability tends to escalate in regions with lots of economic volatility and limited employment opportunities, particularly for young people.
In a new presentation to clients, Deutsche Bank’s Raj Hindocha and Marcos Arana include this chart of countries with “youth bulges.” These are the countries where young males make up a significant share of the population.
“A weaker US role in [the Middle East and North Africa] exacerbates geopolitical risk in the region, which could lead to higher oil prices and curb global growth,” write Hindocha and Arana.
“Geopolitical risk is ever-present but unpredictable by nature,” they said. “While a large scale geopolitical risk event is not our base case, investors should be mindful of alternative scenarios relative to the benign outcome currently expected by markets.”