This month’s coverage of the Americas shines a spotlight on Peru, where President Ollanta Humala’s approval rating has trended steadily downward over the last year, with each month’s polls bringing a new record-low in his popularity. Although the poverty rate has continued to fall and the middle class is growing, negative fallout from a police corruption scandal and perceptions that crime is worsening have contributed to public discontent, and allegations of nepotism involving the president’s brother and criticism of the influence exerted by First Lady Nadine Heredia, who is accused of orchestrating the downfall of Prime Minister Cesar Villanueva in February 2014, have reinforced the negative trend. The retention of Finance Minister Luis Miguel Castilla in the latest overhaul of the Cabinet signals that the president plans to maintain an orthodox economic policy, and our report will examine whether his weakening political position poses risks in that regard. The analysis will also include an assessment of prospects for resolving disputes with indigenous groups that have disrupted progress on major investment projects in the mining sector.
As part of our coverage of Western Europe this month, PRS will explore what the stunning victory of Marine Le Pen’s far-right National Front at elections for seats in the European Parliament portends for the political environment in France. The electorate has delivered a clear wake-up call to President François Hollande’s deeply unpopular Socialist Party government, which has been further embarrassed by a $19 billion revenue shortfall resulting from the overestimation of the projected income from tax increases introduced in 2013. PRS will examine the formidable challenges the government faces this year to restore its tattered credibility and what it will mean for an economy that is still flat-lining against a backdrop of rising unemployment, even as economies elsewhere in the EU are gearing up for a revival.
A detailed briefing on the United Kingdom will likewise assess the implications of the first-place showing of the populist and euroskeptic UKIP at the European elections, which also confirmed the collapse of popular support for the LibDems, the junior partner in Prime Minister David Cameron’s Conservative-led coalition government. PRS will discuss what investors can expect in the lead up to the next general election in May 2015, and how the Labour Party might go about tackling the structural reforms that will be required to reduce the country’s enormous debt burden.
Our coverage of Eastern Europe features an examination of the outlook for political stability in Czech Republic following the strong showing of the moderately euroskeptic ANO at the European elections. The coalition pact reached between the center-left CSSD, the conservative KDU-CSL, and the ANO has helped to limit disagreements within the ideologically diverse coalition, but a perceived shift in the balance of power among the partners could give rise to tensions, particularly if adoption of the euro ceases to be a politically realistic objective, even in the medium term.
Our coverage of the Middle East and North Africa will focus on two countries that recently held presidential elections. Our analysis of the outlook for political stability in Algeria, where the ailing President Abdelaziz Bouteflika won a fresh five-year mandate in early April, will include an examination of proposed constitutional reforms that appear to be aimed at mitigating the risk of a succession crisis if the president is not able to serve out a full term. The report will also take a look at the composition of the post-election government, and assess the implications for the near-term policy direction as it affects the investment climate.
Turning to Egypt, PRS will examine whether the landslide presidential election victory of Abdel-Fattah al-Sissi, the recently retired former commander of the armed forces, will create the basis for more stable domestic conditions, or merely marks the beginning of a fresh period of political tumult. Although he won more than 90% of the vote, a low turnout could weaken the former general’s claim to have secured a solid mandate to carry out unpopular economic reforms and continue the crackdown on Islamist opponents of the new regime. A discussion of the risks arising from both of those sources will be a key element of the analysis.
Thailand dominates our coverage of Asia this month as we evaluate what is next for a country caught in a seemingly inextricable political quagmire that resulted in the second coup d’etat in eight years in April 2014. The military’s move underscores the futility of attempts to resolve the political divide between supporters and opponents of Thaksin Shinawatra, the exiled former prime minister, by electoral means. Our report assesses the likely steps that will be taken before the restoration of civilian political control, which will all but certainly include moves to legally and politically marginalize the pro-Thaksin forces. In addition, the possibility of royal succession—King Bhumibol is 86 years old—also figures to factor in determining the timetable for the end of military rule. In addition to assessing the outlook for political stability, PRS will examine how the military regime and its civilian allies plan to repair the damage to Thailand’s institutional credibility, which has been tarnished by the closure of the Senate and the impotence of the judiciary. In addition, we will discuss the implications of the recent political upheaval for an economy that is dependent on exports and tourism, and what changes the coup heralds with regard to the climate for investment.
PRS will also issue an update on developments in China, where, against the backdrop of a deceleration of economic growth to levels not seen in more than two decades, Prime Minister Li Keqiang has unveiled a package of measures designed to attract private investment and advance the project of gradual financial liberalization. The general thrust of the measures points to a shift from large stimulus packages to an increased reliance on the growth of small and medium-sized firms to power an economic rebound. PRS will local governments to expedite existing public sector development projects. PRS will also look at the government’s broadening of its anti-graft drive to include retired senior party officials and military officers, and to the separatist violence in the restive Xinjiang province.
Turning to Malaysia, PRS will assess the governing National Front’s prospects for serving out its full term through 2018. Last year’s election results proved to be disappointing for Prime Minister Najib Razak’s coalition, but alliance appears to have weathered the immediate storm. Our report will look at potential catalysts for public unrest over the next 6-12 months, and discuss how instability might affect the policy climate.
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