Barack Obama: US mid-term elections is just one factor expected to impact the economy.
Barack Obama: US mid-term elections is just one factor expected to impact the economy. Getty Images

World markets to be hit by international political tensions

POLITICS could hit financial markets around the world this year, with elections planned in major trading nations as well as the United States mid-term elections, a political advisory firm warns.

The firm, Political Monitor, suggested markets will be hit by tensions between countries in Asia, the Middle East and Europe as a result of the political instability.

Firm partner Damian Karmelich said markets and investors should be preparing now for ongoing economic volatility as a result.

"The rise of right wing parties across Europe and their increasing professionalism and coordination threaten the European project while the battle for the soul of the Republican Party in the United States provides little certainty on key legislative votes throughout the year," he said.

"Meanwhile, Indonesia's presidential and parliamentary elections will set the tone for Australia's relationship with the giant of South East Asia over the next five years."

Among the major political events set to dominate the economic climate this year were the tensions over disputed islands in the South China Sea, elections in India and Indonesia, the EU elections, and the US mid-terms.

The research also warned of a power shift in the Middle East that could affect oil markets as Iran returns to the world market and America's focus turns to Asia away from that region.

"While markets will have some breathing room it will not be long before they have to begin factoring in the economic views of the major parties leading presidential contenders," Mr Karmelich said.

"It's a reminder for markets that the political cycle never rests."


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