PRS’ coverage of the Americas includes fully updated reports on three Latin American countries—Costa Rica, Guatemala, and Paraguay—and the United States, where the constant controversy swirling around President Donald Trump and his inner circle has raised serious doubts about the Republican Party administration’s ability to implement its pro-growth agenda, despite the presence of Republican majorities in both the House of Representatives and the Senate.  Of greater immediate concern, the uncompromising stance of the GOP’s ultra-conservative Freedom Caucus suggests that the Congress could fail to secure approval of legislation to raise the government’s borrowing limit in time to avoid default without the backing of the opposition Democratic Party, which may condition its support on tax and spending measures opposed by the president, the Freedom Caucus, or both.

The report will assess the near-term risks related to the upcoming battles over the debt ceiling and the 2017/2018 budget, and what the stalling of the Trump administration’s reform agenda means for both the investment climate and economic performance over the medium term. PRS will also examine the implications of an expanding probe into suspected criminal actions on the part of the president’s top advisers and Trump himself for the GOP’s electoral prospects in 2018 and 2020, and political stability more generally.

Coupled with a detailed report on Sweden, our coverage of Western Europe this month features an in-depth analysis of the present situation in Greece, where confidence has improved following the eventual completion of the bailout review in June (after a six-month delay), and a successful return to the sovereign bond market in July for the first time in three years. The economy has fortunately picked up this year, supported by tourism, but we look more closely at the domestic political situation, and at how the main government party Syriza is handling policymaking, evaluating social stability and whether fresh elections are likely. Our report also identifies the main stumbling blocks in the next round of talks with the troika of lenders, focusing on banking sector risk-testing, structural reforms, the primary budget surplus, and the prospect of debt relief. We round-out with a forward-looking perspective on major macro-fiscal indicators, privatization moves, and regulatory changes affecting investors.

Our report on Sweden contrasts the country’s hitherto strong economic fundamentals with what is becoming an increasingly unstable political situation.  Both the Social Democrat minority government, and the main opposition center-right Moderate Party, have endured difficulties lately—the former sparked by a data leak from the Transport Agency; the latter involving a change of leadership.  Our report looks at how this is affecting public opinion ahead of the next legislative elections due to be held by September 2018, and whether there is any prospect of an early poll tied to the fortunes of the government’s 2018 budget, which will be put to a vote in parliament in the fall.

The analysis also considers what government is likely to be formed next time, and how this might impact on the business environment and key assets, including the krona. We also analyze prospective developments in key macro-economic variables, looking at the sustainability of economic growth, deficit projections and inflation to determine the outlook for fiscal and monetary policy, and notably whether investors need to factor in higher borrowing rates from the Riksbank.

Turning to Eastern Europe, our coverage this month features a new report on Poland, where the conservative nationalist PiS government has refused to retreat on controversial judicial reforms approved in late July, despite the threat of EU sanctions.  The opposition has organized mass protests against what critics claim are direct assaults on constitutional rule, and political tensions have been compounded further by signs of a growing power struggle between the government and President Andrzej Duda, who recently blocked the appointment of several new generals promoted by Prime Minister Beata Szydlo’s government.

The analysis will include an assessment of the risks for investors related to the standoff with the EU, and what the PiS’ nationalist agenda portends for both the business climate and economic performance over the next five years.  Our report will also examine the outlook for medium-term political stability, against a backdrop of moves by the PiS party to weaken the checks on the Parliament’s assertion of power.

In Asia, we lead on China this month, looking at the state of the economy, the country’s debt-load and prospective political changes in the higher echelons of the Chinese Communist Party (CCP), ultimately assessing what this will mean for stability, the currency, the global economy, and foreign-owned assets. We look ahead to the CCP’s 19th National Congress in October, exploring who will emerge as the new national leaders, and how it will impact on President Xi Jinping’s authority, notably in terms of policymaking as the state supports the economy and addresses key imbalances.

Our report pays particular attention to foreign policy issues, analyzing China’s response to the North Korea crisis and its economic effects, as well as territorial claims in the South China Sea, noting how it is affecting relations with Vietnam (a country we also look at in detail this month), and the flaring of tensions with India over disputed territory in the Himalayas. We look at China’s industrial and trade policy aspirations, and provide forecasts for a range of macroeconomic variables based on high-frequency consumption, production and price indicators, to identify the main strengths and weaknesses in China’s outlook.

Shifting to the Middle East and North Africa, the September roster includes updates on Syria and Kuwait, where the royal government has of late been focusing its attention on moderating a dispute between its partners in the GCC.  Matters related to the GCC are also in the political spotlight on the domestic front, where parliamentary opposition to the introduction of a GCC-wide VAT in 2018 points to a growing probability of yet another early election, as Emir Sabah seeks to overcome obstacles to the implementation of a reform agenda seen as crucial to freeing the kingdom from its dependence on oil.

The update will assess the probability of fresh elections within the next 18 months, and whether a return to the polls might produce a legislature more inclined to supporting the government’s reforms.  PRS will also discuss the outlook for the economy, in light of the persistence of low prices for oil, with particular attention to fiscal conditions.

Our coverage of Sub-Saharan Africa this month includes a report on Zambia, which has seen political tensions ease somewhat as treason charges against the main opposition leader, Hakainde Hichilema, have been dropped. Hichilema’s United Party for National Development has been involved in a protracted and destabilizing standoff with the government since President Edgar Lungu’s narrow win in the 2016 election. The opposition refused to recognize the election victory, and the government has responded by aggressively pursuing those opposed it, including some media figures.

Unsurprisingly, Lungu’s regime has been criticized for its increasingly authoritarian bent.  Foreign investors remain jittery over the country’s future, which has delayed talks with the IMF for a new credit facility.

PRS will assess the short- and medium-term prospects for Zambia, which will include a look at the viability of reconciliation talks ahead of the 2021 elections, prospects for new funding from the IMF, some obstacles faced by mining firms, and the outlook for the economy, as copper prices—a prime export—stage a recovery.

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