PRS’ coverage of the Americas includes a fully revised report on Argentina, where President Mauricio Macri is approaching the end of his first year in office. Macri’s victory at the 2015 presidential election ended 12 years of populist rule by the Front for Victory, and his efforts to repair the economic damage inflicted by years of unorthodox fiscal policies have thus far mostly worsened conditions for average citizens. Although a majority of voters continues to give Macri the benefit of the doubt, his approval rating is falling, and unless he is able to point to some positive results fairly soon, the president and his legislative allies could incur significant losses at mid-term elections next year. The report will assess Macri’s chances of avoiding such a scenario, focusing on the government’s strategy for spurring an economic recovery, while also highlighting the possible implications for both political and economic stability if he should fail to do so.
Turning to North Africa and the Middle East, upcoming coverage includes an update on Algeria, where the recent resignation of Amar Sadaani as general secretary of the National Liberal Front (FLN) points to building strife within the governing party as competing factions battle to determine who will succeed the country’s ailing president, Abdelaziz Bouteflika. The analysis will include an assessment of what Sadaani’s departure says about the current state of affairs at the top of the political hierarchy, and how that could affect the chances of leading contenders to succeed the president. The update will also examine recent developments on the policy front as the government grapples with the economic constraints created by low oil prices,
In sub-Saharan Africa, PRS takes a look this month at Cameroon, where President Paul Biya maintains a firm grip on the ruling Cameroon People’s Democratic Movement. With no electoral tests until 2018, and with the fragmented opposition struggling to coalesce around a unifying figure, Biya faces few immediate challenges to his rule. The militant Boko Haram group continues to harass civilians in Cameroon’s far north, but it has suffered significant setbacks over the past year, which has diminished the already low risk that the group might pose a threat to domestic security more generally. As such, the principal threat to political stability remains the uncertainty surrounding Biya’s strategy for ensuring that an inevitable transfer of power to a younger leader proceeds smoothly.
The government maintains a generally pro-business policy framework. In August, Cameroon signed an Economic Partnership Agreement with the EU, breaking ranks with regional peers who say Brussels should offer more favorable terms. Economic growth is forecast at 4.8% in 2016, as higher hydrocarbon output and high capital spending partly offset lower oil export receipts. Faced with lower revenues, the government is ramping up non-concessional borrowing, leading to some concerns over rising debt levels in the mid-term.
Our coverage of Asia this month looks at the political transition in Myanmar, where the de facto national leader, Aung San Suu Kyi, is cautiously attempting to guide the country safely down a path leading from stifling military rule to open democracy. The update assesses the accomplishments of the National League for Democracy (NLD) government as it nears the end of its first year in power, and examines what remains to be done, focusing especially on what can be accomplished in the near term. Suu Kyi has made clear that her top priorities are building trust with the military and promoting national reconciliation, while avoiding confrontation. Such a strategy suggests that for the time being she will not devote much energy to the constitutional reforms sought by the NLD’s supporters, a choice that has potential negative implications for domestic stability, and, by extension, the government’s efforts to attract the foreign investment that is crucial to achieving rapid economic development. PRS will also assess the likely impact of the NLD’s economic plan and a new investment law that is due to take effect next April, and how these changes, coupled with the political backdrop, will shape the economy and Myanmar’s appeal as a leading frontier market to rival the likes of Vietnam following the surge in investor interest since the initiation of the reform process.
This month our coverage of Western Europe leads on Germany, as we try to ascertain how political events will unfold for Chancellor Angela Merkel with the federal election looming in the fall of 2017. We look at prospects for the governing parties, Merkel’s Christian Democratic Union (CDU), supported by its smaller sister party, the Christian Social Union (CSU), and fading coalition partner, the Social Democratic Party (SPD), led by her formidable Deputy and Minister for Economic Affairs and Energy, Sigmar Gabriel. We assess the chances of repeating their success in 2013 in the light of recent economic trends, and the refugee crisis that is now putting pressure on local communities, government finances and German national identity, and is heightening social instability risk, evinced by public demonstrations and isolated violent attacks perpetrated by residents and asylum-seekers. We look at the various challengers in the race, the liberals, Greens, hard left and the populist, euroskeptic Alternative for Germany (AfD), which has been doing well enough in state elections to have some influence over the outcome and gain its first seats in the Bundestag. We assess how this will impact on policymaking, both before and after the elections, how it will affect the ‘real economy’, and ultimately what it will mean for Germany’s hitherto ultra-safe asset classes as other risks unfold across the continent.
We also look at what investors can come to expect from a “post-Brexit” United Kingdom, as the government triggers Article 50 of the EU Treaty before March 2017 to formally begin what is expected to be an uncertain two-year separation process of fraught negotiations. Our report analyzes the various options on the table for Prime Minister Theresa May’s Conservative Party government when forging a new relationship with the EU, whether investors must contemplate a “hard” or “soft” Brexit, and how it will handle big investors in the interim, in the light of a suspected deal with Nissan to persuade the Japanese car-maker to continue production in the North-East of England. Our report asks whether talk of a snap election is mere speculation in light of the Fixed-Term Parliament Act, but also under what circumstances it might come to pass, possibly sparked by a rebellion among backbench Tory MPs, some of whom were angered by the decision to go ahead with constructing a third runway at London Heathrow Airport, which may still never see the light of day due to legal challenges. Our report also includes an update on the Scottish National Party’s renewed bid for secession north of the border, and we round out with a temperature-check on the health of the UK economy to see what effects Brexit will have (both positive and negative) on key macro-fiscal indicators and how the new cabinet will shape the investment agenda.