The Impact of Political Instability on Global Markets: An In-Depth Guide for IELTS Reading Practice

The IELTS Reading section assesses your ability to understand and interpret English texts, and topics often focus on contemporary global issues. A recurring theme in previous exams includes the effects of political instability on global markets. This topic is not only highly relevant but also provides rich material that tests your reading comprehension skills across various subtopics. Given its prevalence, understanding this topic well can significantly enhance your chances of scoring high in the IELTS Reading exam.

Main Content

Reading Practice: The Effects of Political Instability on Global Markets

Reading Passage (Hard Text)

Political instability can have profound effects on global markets, influencing everything from stock prices to international trade dynamics. Past events like Brexit, the Arab Spring, or the Venezuelan crisis offer striking examples of how political upheavals can trigger economic turbulence globally.

Political instability often leads to a loss of investor confidence. When a country experiences political disruption, investors may perceive higher risks, leading them to withdraw their investments. This flight of capital can depreciate the country’s currency and lead to inflation. For example, the Turkish Lira lost substantial value due to political uncertainty surrounding elections and policy changes in recent years.

Moreover, political instability can also disrupt supply chains, affecting global trade. Consider the trade tensions between the United States and China, exacerbated by unpredictable political stances. Companies operating in uncertain political environments may face delays, increased costs, and the need to find alternative suppliers, leading to inefficiencies and higher consumer prices globally.

Lastly, political instability can lead to economic sanctions, as with the case of Russia following its annexation of Crimea. These sanctions not only affect the target country’s economy but can also have ripple effects on global markets, influencing the price and availability of commodities like oil and gas.

Political Instability and Global Markets

Questions

1. Multiple Choice

   1. How does political instability generally affect investor confidence?

      • A) It increases investor confidence.
      • B) It has no effect on investor confidence.
      • C) It leads to a loss of investor confidence.
      • D) It depends on the country’s economic status.

   2. What happened to the Turkish Lira as a result of political uncertainty?

      • A) It appreciated in value.
      • B) It lost substantial value.
      • C) It remained stable.
      • D) It fluctuated unpredictably.

2. True/False/Not Given

   • Political instability has no impact on global supply chains. (False)
   • The Arab Spring had no effect on international markets. (False)
   • Economic sanctions are a common consequence of political instability. (True)

3. Matching Information

   Match the following events with their economic consequences:

   • A) Brexit
   • B) The Arab Spring
   • C) Venezuela crisis
   1. Disruption in oil supply
   2. Increased inflation due to currency depreciation
   3. Trade barriers affecting global markets

4. Sentence Completion

   Complete the sentences below.

   • Political instability often leads to __, causing investors to withdraw their investments.
   • When political instability disrupts supply chains, companies may face _____ and ____.

5. Summary Completion

   Fill in the gaps in the summary below.

   Political instability can have a significant impact on global markets. This is evident in events like Brexit and the , where political disruptions led to economic . Investors tend to withdraw their funds, leading to a depreciation in and causing . Additionally, trade tensions, as seen between the US and China, result in ____ affecting global supply chains.

Answer Key

1. Multiple Choice

   1. C
   2. B

2. True/False/Not Given

   • False
   • False
   • True

3. Matching Information

   • A – 3
   • B – 1
   • C – 2

4. Sentence Completion

   • higher risks
   • delays; increased costs

5. Summary Completion

   • Arab Spring; turbulence; currency; inflation; inefficiencies

Lessons

When dealing with topics on political instability and global markets in the IELTS Reading section, common mistakes include:

1. Missing Key Information: Look for nuanced effects like investor reactions and supply chain disruptions.
2. Confusing Currency Effects: Remember, political instability usually depreciates local currencies.
3. Overlooking Global Impacts: Always consider how local events affect global markets.

Vocabulary

Some challenging vocabulary from the passage includes:

1. Investor Confidence (n): /ɪnˈvɛstər ˈkɒnfɪdəns/: Belief in the stability and profitability of investments.
2. Depreciation (n): /dɪˌpriːʃiˈeɪʃən/: A reduction in the value of an asset or currency.
3. Sanctions (n): /ˈsæŋkʃənz/: Penalties imposed by one country on another to force compliance with international law.

Grammar Focus

Key grammar structures to note include:

1. Conditionals and Consequences: “If political instability occurs, then…”.
2. Passive Voice: Political instability is caused by multiple factors.
3. Comparative Structures: Political instability in Turkey led to a greater loss of investor confidence than in other countries.

Conclusion

Achieving a high score in the IELTS Reading section requires practice and familiarity with current global issues like political instability and its effects on global markets. Pay attention to the nuances in the reading passages, enhance your vocabulary, and understand the key grammar structures to succeed.

For more detailed practice and personalized coaching, consider joining a prep course at IELTS.NET, where experienced instructors with over 20 years in the field provide tailored guidance to help you excel.