This month’s coverage of the Americas includes a new report on Brazil, where the government headed by President Michel Temer is attempting to implement the reforms required to fix the broken economy amid an ever-expanding corruption scandal that has led to the resignation of several of his Cabinet ministers.  The scandal has placed the president himself under a cloud of suspicion, resulting in a rapid depletion of the political capital he needs to secure congressional approval of unpopular fiscal and structural economic reforms.  Our report will assess the prospects for the Temer administration’s agenda leading up to campaign for presidential and legislative elections in October 2018, and will provide an early read on the likely composition of the government that will take over in January 2019, both of which figure to have a significant impact on business and consumer sentiment, and, by extension, the potential for a strong economic recovery.

Turning to the Middle East and North Africa, PRS will issue an update on Iraq, where a protracted, but so far successful, campaign to force ISIL’s retreat from the city of Mosul, its last stronghold in Iraq, has overshadowed the continuing political dysfunction in Baghdad, where ethnic and sectarian rivalries and mistrust have impeded Prime Minister Haider al-Abadi’s effort to implement reforms aimed at improving government transparency and efficiency.  The update will examine the prospects for liberating Mosul, and for maintaining a semblance of unity among the political factions once the common enemy is safely at bay.

PRS will also assess the risks associated with the change of government in Washington.  The Iraqi parliament has introduced a ban on the entry of US citizens in response to President Donald Trump’s recent executive order temporarily barring admission to the US for non-citizens traveling from seven countries in the Middle East, including Iraq.  The move reveals an animus that could undermine US influence in Iraq, which, in combination with the Trump administration’s adoption of a more isolationist foreign policy, points to a growing role in Iraq for Iran and/or Russia, a development that could endanger the interests of western investors.

In sub-Saharan Africa, President Alassane Ouattara’s government in Côte d’Ivoire has been shaken by a mutiny by soldiers demanding higher pay and better living conditions.  Although the incident was resolved after the government agreed to the soldiers’ demands, the episode highlights the dangers posed to civilian leadership by the country’s fractious military.  Ouattara faces no imminent threat to his power and the mutiny does not appear to have dented investors’ trust in the government’s economic management, but international confidence in Ouattara will quickly erode in the event of further signs of unrest in the barracks.

The government maintains a pro-business outlook with a strong degree of policy continuity.  Ouattara’s hand has been strengthened by the overwhelming approval of a new constitution in a national referendum held in October, and the victory of the governing coalition at parliamentary elections in December.  Côte d’Ivoire boasted the fastest-growing economy on the continent in 2016, and is forecast to growth by around 8% in real terms this year, although the potential for disruptive public-sector strikes and other security-related difficulties poses some downside risk to the forecast.

Over in Western Europe, PRS swill assess the potential risks associated with the approaching parliamentary elections in Norway, to be held as usual on a four-year cycle this September.  The campaign is gearing up for a close contest between the governing center-right coalition, which still requires the support of its two parliamentary partners to pass legislation, and the ‘red-green’ opposition led by the Labour Party which is looking as if it will win the most votes and seats in Parliament once again.  Our report assesses the prospect of Labour this time forming a coalition, and what it would deliver following four years during which Prime Minister Erna Solberg’s Conservative Party and its junior partner, the populist Progress Party delivered on a center-right, tax-cutting agenda, but without completing the bigger administrative and structural reforms that are necessary to overcome Norway’s reliance on hydrocarbons tax receipts to fund the welfare state.  Our report looks in detail at how petroleum sector policy will play a big role in the election campaign, and what foreign investors can expect on that score if Labour gains power.  We also look in detail at how the oil crisis is affecting the economy, and how it will impact on key economic risk variables in 2017.

We also feature an update on Finland this month in the advent of municipal elections to be held this April which are likely to mark the government’s report card by providing an indication of public faith in the governing coalition, which is suffering from typical mid-term blues.  We analyze the shock decline in popularity for the populist Finns Party, which has been unable to press home its anti-immigration and welfare protection agenda working alongside the Centre Party and National Coalition Party.  We also analyze prospects for the Centre Party Prime Minister Juha Sipila, who has become implicated in a scandal suggesting he put pressure on independent media alleging government contracts were awarded to a company owned by his relatives.  We assess whether the coalition will remain intact until the next elections in 2019, we look at what policies the government will pursue in the meantime, and we take a rain-check on Finland’s weak economy to see if the clouds have dispersed and a brighter picture is emerging for 2017, focusing our attentions on growth-drivers and the fiscal situation which has been weighing on Finland’s risk profile for some time.

Our coverage of Eastern Europe includes a fully revised report on Bulgaria, where an early election has been called following the resignation of the minority government headed by Boyko Borisov.  His government already rocked by the erosion of support among the non-coalition parties on which the alliance of GERB and the RB depended to pass legislation, Borisov threw in the towel following the presidential run-off election held on November 13, in which the government’s candidate was roundly defeated by Rumen Radev, a former air force commander who favors closer ties with Russia.  The polling data suggests that the elections scheduled for late March will produce another fragmented Parliament, and most likely another minority government, but this time headed by the center-left BSP.  Our report will broadly examine the policy implications of GERB’s replacement by the BSP, while more deeply assessing what the change in government could mean for Bulgaria’s relationship with the EU, which has historically provided the impetus for reforms aimed at improving the climate for investment and trade.

Looking at Asia, PRS will issue an update on Vietnam, where the Communist Party continues to embrace a liberalizing economic agenda without contemplating the dangers of political reform.  Our report looks at the key actors in the CPV hierarchy and measures the threats posed by civil protest, notably concerning environmental policy, leveled against foreign investors with poor pollution control management, and against the Chinese, resulting from Beijing’s aggressive South China Sea tactics.  We also look at the implications of Donald Trump’s reversal on the Transatlantic Trade and Investment Partnership, and what this will mean for Vietnamese foreign relations and prospective trade deals, against the backdrop of a new medium term economic restructuring plan the government outlined towards the end of last year.  Our report rounds out by focusing on the key economic risk factors, balancing growth prospects against the fiscal risks of managing a large deficit and growing debt burden.

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