Coming Soon in Our April 2019 Political Risk Reports

In addition to fresh analyses of Guatemala, Trinidad & Tobago, and Suriname, PRS’ coverage of the Americas this month includes an update on Haiti, where the cautious optimism that accompanied the inauguration of President Jovenel Moïse a little more than two years ago has evaporated, amid violent anti-government demonstrations triggered by worsening economic conditions and scandals involving the theft of billions in foreign aid. Although Moïse began his term boasting a legislative majority, a rarity for a Haitian government, political stability has proven to be elusive, a fact underscored by the toppling of Prime Minister Jean Henry Céant’s government in late March, apparently at Moïse’s direction. The president must move quickly to secure legislative confirmation of a replacement, or risk a prolonged delay in meeting the conditions to obtain badly needed disbursements of financial assistance from multilateral lenders.

The update will assess the near-term prospects for the economy, and the implications for the domestic political climate in the coming months. The analysis will also address the risks for internal security raised by a February incident involving the arrest of a group of heavily armed foreigners that included five Americans, who were subsequently turned over to the US, but will not be charged with any crime. The events have stoked public outrage and spawned conspiracy theories of a US-backed plot to steal $80 million from the central bank on behalf of President Moïse and to rid the president of an unwanted prime minister via assassination.

As well as featuring a report on Finland this month, our coverage of Western Europe leads with an up-to-date analysis of the United Kingdom that focuses on the Brexit negotiations and the country’s delayed departure from the EU. Following Prime Minister Theresa May’s announcement that she plans to stand down if a withdrawal agreement is passed to allow another leader to negotiate the future trade arrangements, our report looks closely into the Conservative Party’s leadership contest, amid recent cabinet turmoil, while also assessing the various possibilities to end the deadlock in Parliament, including the prospects of a no-deal Brexit or snap election not officially due until 2022.

Our report looks at several aspects of the Brexit saga receiving less media attention, including the emergence of not one, but two new political parties affecting voting intentions, one called the Brexit Party, led by Nigel Farage, the former leader of the UK Independence Party, and another, Change UK, formed by The Independent Group of pro-EU MPs who broke away from both the Conservatives and main opposition Labour Party. We look at constitutional implications feeding into the Brexit process, and also look more deeply into the UK’s fiscal arithmetic and economic outlook under various Brexit scenarios, each with implications for UK equities, gilts and pound-sterling.

Coverage for Eastern Europe includes a fully revised report on Romania, where the political climate has been troubled by the ongoing effort of the main governing PSD to implement judicial reforms designed to shield corrupt politicians from prosecution. Political strife will be reinforced by the combative relationship between the government and President Klaus Iohannis, which is likely to intensify as the president campaigns for a renewal of his mandate at an election that falls due in late 2019.

The report will include an in-depth analysis of the likely outcome of the presidential vote and parliamentary elections that fall due in 2020, and the implications for the climate for investment and trade over the next five years. Among the topics discussed in that regard will be Romania’s relationship with the EU, and the prospect for steps to address doubts about the current government’s commitment to the rule of law, which poses an obstacle to progress toward closer integration, such as admission to the borderless Schengen area, which was approved by the European parliament in late 2018, but must still obtain the unanimous consent of the European Council.

The focus for the Middle East and North Africa is a new report on Algeria, where mass protests forced President Abdelaziz Bouteflika to drop his plans to seek a fifth term at a presidential election that was scheduled for this month, but has been delayed indefinitely as the political establishment weighs its options. The fact that the main governing FLN was prepared to back another term for the aged and ailing incumbent points to a lack of consensus among the political, business, and military elite on a suitable successor, and underscores the risk of a destabilizing power struggle now that the country’s power brokers have been forced to abandon Bouteflika, who is expected to be formally removed on health grounds in the coming weeks.

Our report will analyze what these developments mean for political stability over the next 18 months, and assess the most probable outcomes of the political maneuvering that is already taking place both behind the scenes and in the streets, where protestors emboldened by their success are demanding an end to rule by unelected power brokers (le pouvoir). The analysis will include a discussion of the potential for an increase in turmoil risk, and what that could portend for policy making as it affects economic sectors of greatest interest to foreign investors.

Our extensive coverage of Sub-Saharan Africa—which includes reports on Angola, Mali, and Niger—leads with a fully updated report on Nigeria, following the re-election of President Muhammadu Buhari for a second term in February, but on a record low turnout that raises some question of legitimacy. Our report looks into the government’s interventionist policies, the prospect of any major new reforms and measures to deal more forcefully with corruption, and law changes affecting the oil industry and the operating environment more generally, also causing tax disputes with major corporations.

We look at other major risks, including multiple security threats, not least posed by the Delta Avengers, a militant group previously attacking oil infrastructure vowing a new campaign of violence to cripple the economy unless the government addresses long-standing grievances concerning poverty and oil pollution. Our report rounds out by taking an informed assessment of macro-fiscal stability, including likely scenarios for GDP growth, inflation, external balances and debt metrics, and their impact on borrower creditworthiness, monetary policy reaction functions, and currency stability.

Our coverage of Asia this month includes an update on Singapore and an in-depth report on the shifting political kaleidoscope in Taiwan following the resounding defeat in local elections and key referenda for President Tsai Ing-wen’s ruling Democratic Progressive Party last year, ultimately sparking the resignation of Premier William Lai, and the formation of a new cabinet under Su Tseng-chang. Our report looks at the various possibilities ahead of presidential and legislative elections scheduled for January 2020, focusing on recent by-elections and their implications for the China-friendly Kuomintang’s return to power.  We look in detail at the domestic policy agenda, and of course Cross Strait relations in the wake of increased pressure and threats from Chinese President Xi Jinping that Taiwan “must and will be” reunited with China in accordance with the one-country, two-systems principle, while reserving the right to use force if necessary to achieve this aim. Our report also looks at the effects of a slowing Chinese economy worsened by trade tariffs on Taiwan’s economic prosperity, how slowing exports will affect GDP growth, and how reduced corporate earnings and capital flows are likely to influence the Taiwan dollar trend, while also discussing new measures authorities hope will attract more inward investment.

Since 1979, The PRS Group Inc., has been a global leader in quant-based political and country risk ratings and forecasts. This commentary represents a sneak peek from our upcoming political risk reports. For more information please contact us at (315) 431-0511 and sales@prsgroup.com, or explore a subscription to PRS Online and/or ICRG Online today to receive political risk updates.

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