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Will Political Risk Derail World Economic Growth?
CNBC.com | March 26, 2012 | 02:27 AM EDT

In a tentative recovery, everyone’s looking for the next nasty that could spring up and derail growth next — the answer is political risk ...All over the world.

We all know about the geo-political tensions around the Middle East that sent Brent over $126 earlier this month. But in a year heavy with elections and politically unpopular austerity, national governments have much work to do and many risks to their power.

In Europe, several governments have fallen since the crisis started and their replacements aren’t having an easy ride of it either.

Portugal is a prime example. The current Prime Minister Pedro Passos Coelho won power nine months ago in the middle of the crisis, after the previous leader called in the bailout and subsequently stood down.

Last week in Portugal a clash between the government and the largest union over job reforms prompted the country’s second general strike during Coelho’s reign. That as markets speculate Portugal will need a second bailout and Greek-style debt restructuring.

In Italy , where the government fell, to be replaced by technocratic leader Mario Monti, unions are also railing against labor market reform.

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