Coming Soon in Our August 2021 Political Risk Reports

PRS’ coverage of the Americas this month includes an update on political developments in Argentina, as well as fully revised reports on Cuba, where a recent rare eruption of political unrest highlights the challenges for the Communist regime in the post-Castro era, and Peru, which is being watched by investors with a wary eye following the victory of a leftist populist with no previous political experience in the two-stage presidential election completed in early June.

The centrist parties that backed Pedro Castillo in the run-off contest against his right-wing rival, Keiko Fujimori, hoped that their support and the minority status of the new president’s Peru Libre party in the Congress might convince him to adopt a moderate course once in office. Castillo’s nomination of far-left figures to head the government and guide Peru’s foreign policy disappointed investors, who have maintained a cautious posture following the appointment of Pedro Francke, a technocrat who has previously worked at the World Bank, as finance minister.

Our analysis will examine the feasibility of achieving the new administration’s stated policy objectives in light of the legislative arithmetic, and to what extent Castillo’s chances of success might require compromise with more moderate political forces. The risk assessment will take into account Castillo’s call for constitutional reform, examining the potential for actual movement along those lines and how changes to national charter might affect the climate for investment and trade.

Our Asia coverage focuses on China and Japan this month, as we delve into their respective political machinations and how pandemic management, foreign policies, and economies are shaping up as 2022 comes into view. In Japan, the Olympic Games host, we look ahead to the upcoming elections in the fall providing another test of popularity for Yoshihide Suga, who for now remains Prime Minister and leader of the Liberal Democratic Party despite the loss of public faith amid another Covid state of emergency and a poorly handled vaccination program. Our report looks at what the results of the Tokyo prefecture elections that were held in early July might indicate for the national vote, who are the likely contenders to replace Suga should he be replaced, and what investors can expect on the policymaking front through to the vote, and beyond, in 2022. We also delve into Japan’s principal foreign relations with the US, China, and South Korea to identify the implications, and we tease out the likely developments in key macroeconomic indicators influencing the Bank of Japan’s prospective moves, and in turn the yen’s market value.

In addition to a timely update on Greece this month, our coverage of Western Europe looks into the salient political and economic risks affecting investors in Spain, including an assessment of the political divide given the rise of the populist right and the tensions created by a recent LGBT hate crime, prompting large-scale protests from the liberal left. Our report analyses in detail other issues, ranging from the aftermath of the regional elections in Madrid and the pardoning of Catalan regional leaders, to the impact of the latest migrant crisis and the recent cabinet reshuffle, to assess what each of these means for political stability and policymaking for the rest of this year and into 2022. With no national elections required until late into 2023, we look at the government’s economic and healthcare plans, and its attempt to woo US foreign investors, taking into account Brexit-related issues and the pandemic, including the vaccination rate and a court ruling on the constitutional nature of lockdowns. To round-out, our economic risk section looks into the outlook for the tourism industry, and more widely at Spain’s macro-fiscal metrics which worsened considerably because of the measures taken to support vulnerable groups through the crisis.

Coverage of Eastern Europe will include an update on Romania, where the stability of Prime Minister Florin Citu’s center-right coalition government has been tested by internal disputes over policies related to pensions, state investment, and dealing with corruption within the judicial branch. PRS will assess the risk that friction among the coalition partners might lead to the early demise of the government, necessitating a snap election that contributes to heightened uncertainty and delays policy moves that could reinforce what figures to be a strong economic recovery in the near term.

Turning to the Middle East and North Africa, the roster for August features fully revised reports on Egypt and Syria, and an update on Iran, where a recent presidential election produced a victory for Ebrahim Raisi, a hardline cleric who is a close ally of (and potential successor to) the country’s supreme leader, Ayatollah Ali Khamenei. PRS will examine the implications of conservative dominance within the three main branches of government and how that will impact the efforts of the hardliners to deflect blame for the economic hardships that will persist in the absence of a significant easing of sanctions. In that vein, the update will also assess the prospects for progress in US efforts to revive the 2015 nuclear agreement and discuss the broader implications for regional stability of success or failure on that front.

In sub-Saharan Africa this month we include a detailed update on investor risks in Guinea, plus a report on Ghana, another important mining jurisdiction. There, we hone in on several emerging risks, ranging from how the government is dealing with the more infectious delta variant of Covid-19, to the ongoing resentment shown towards the incumbency from opponents following the elections towards the tail end of last year. Voting secured a second term for Nana Akufo Addo, but only a razor-thin legislative advantage, courtesy of the sole independent member aligning himself with the incumbent New Patriotic Party which has the same number of seats in the legislature as the opposition National Democratic Congress. Our report looks into ongoing protests against the government over the cost of living, dismal employment prospects and what would appear to be worsening insecurity, against the backdrop of restrictions imposed due to the pandemic and a slow vaccination rate. We also look into the implications of corruption allegations leveled against Chief Justice Kwasi Anin-Aboah, and a recent court ruling against the oil and gas company Eni concerning revenue from its mining assets to figure out what it implies for resource investors, considering the present political and economic backdrop. On the latter subject, our report looks into current recovery prospects, inflation expectations, and external balances all influencing the currency, not to mention Ghana’s worse fiscal metrics to ascertain whether the country can maintain its payments obligations.

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.

Back to Insights