Patricia Pelayo Romero is a Senior Economist specializing in insurance and trends research at Allianz. Her work addresses the intersections of insurance, macroeconomic indicators, and social trends. Her research spans financial literacy, labor markets, and climate literacy, driving actionable insights and amplifying stakeholder engagement. Her work has been featured in Consensus Economics and other media. Her initiatives have been instrumental in enhancing corporate social responsibility.
Together, we go further
Last year, elections were celebrated in over 70 countries that collectively are home to 4 billion people – half of the World’s population. Incumbent parties across both developed and developing economies saw their vote share decrease. In fact, every incumbent party facing national elections in rich countries saw its vote share decline – a first time since World War II. The shifts happened in both the political left and the political right: In the EU we measured the ideological center of gravity and found that 16 European countries shifted to the right, much like the US, Australia, New Zealand and Japan in the last national elections. This is a manifestation of the voter dissatisfaction with the cost of living, the global economy, and other seismic changes in the horizon: demographic changes, climate change, and geopolitical tensions.
Another issue stemming from this is the rising trend of polarization. Polarization can manifest itself when the population is divided by ideological extremes, meaning that they hold ideologically distinct position from opposing parties; or when there is a strong emotional dislike and distrust of other political groups, which is called affective polarization. This increased partisanship affects the strength of democratic institutions, social cohesion and trust in functioning markets and economies. Polarization comes at with a sizeable economic cost as political affiliation plays an important role in consumer sentiment and behavior. When looking at heightened political uncertainty across democracies, we find that a -10% and -20% one-period consumer confidence shock would decrease consumption by USD105bn (USD304 per capita) and USD215bn (USD622 per capita) over the next four years. In Europe, the same shocks would decrease consumption by USD52bn (USD147 per capita) and USD103bn (USD296 per capita), the effect being more subdued as consumer confidence in the EU still has not fully bounced back from the effects of the pandemic and geopolitical tensions.
Although polarization has increased in many countries, we also find that countries managed to decrease the level of polarization in the last decade. Other, researchers have found that between 1900 and 2020, there were 105 episodes in which countries were able to reduce polarization from pernicious levels for at least five years. In this period, there were twice as many episodes of polarization in democracies, thus proving that countries have a robust capacity to de-polarize. However, the long shadow of inflation, highly debated fiscal adjustment measures (e.g. increased taxation, social protection reforms, climate policies) and lingering productivity growth require policymakers to bridge further the widening trust deficit, actively reduce polarization risks and tap into the power of unity.
The silver lining is that polarized individuals exhibit a higher willingness to participate in politics across different forms of political engagement. Corporates have a role to play too: public resistance to reforms often stems more from concerns about fairness, trust, and misperceptions. To gain support, decision-makers across the public and private sector should improve communication, engage the public in shaping reforms and address potential harms with tailored support. All of these require tools often found in hyper local architects of change (municipalities or corporates) to build trust through transparent, participatory processes and tap into the power of unity.
In this context, we can all play a part in rebuilding trust and refraining from engaging in divisive discourse – especially as global challenges require a united front and the issues that keep people in the left and right of the political spectrum awake at night are largely the same: the cost of living, the economy, geopolitical tensions, and climate change. Together, we go further.
About Patricia Pelayo Romero
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About Allianz
The Allianz Group is one of the world's leading insurers and asset managers serving private and corporate customers in nearly 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 761 billion euros* on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.9 trillion euros* of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2024, over 156,000 employees achieved total business volume of 179.8 billion euros and an operating profit of 16.0 billion euros for the Group.
* As of September 30, 2025.
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