Coming Soon in Our December Political Risk Reports

PRS’ coverage of the Americas this month includes reports on the Bahamas and Guyana, the latter of which will focus on the ongoing efforts of the PPP-C government headed by President Irfaan Ali to derive the maximum economic benefit from exploitation of the country’s massive hydrocarbons reserves. The political rewards also figure to be significant for the incumbent, which is hoping to translate the oil-and-gas boom into an extended stay in power, a prospect that will reinforce the partisan animosity that is characteristic of the country’s polarized political climate. In that vein, the report will examine the risk implications of the planned holding of local elections in the first half of 2023, which the opposition AFC has already threatened to boycott, citing problems with the validity of the electoral rolls.

In our coverage of Western Europe this month, we include a detailed report on the political and economic risks affecting investors in the Netherlands. Our in-depth analysis evaluates the political and policymaking choices causing conflict between the four party members of Mark Rutte’s ruling coalition. Although a lower house election is not due until 2025, an upper house (provincial Senate) election is due in March 2023. In that light we assess the state of the political parties against the backdrop of weakening economic prospects caused by the rising cost of living and energy crisis affecting both households and corporations, and the evolving debates surrounding the war in Ukraine and the immigration problem in Europe.

Our report also looks into recent political pressure from the US put on the Dutch microchip manufacturer ASML to prevent it from exporting to China. It goes on to evaluate economic prospects in Europe, including the current state of post-Brexit trade negotiations, and how this will all impact on the Duch economy in 2023, notably in terms of investment spending, skilled employment availability, and fiscal sustainability, by identifying the country’s relative strengths and its weak spots.

Over in Eastern Europe, we include updates on Moldova and Slovenia this month, both of which are acutely affected by the war in Ukraine and its impact in terms of energy supply security, Ukrainian migrants and direct threats to their sovereignty should the conflict intensify. The war has crystallized the issue surrounding the breakaway Moldovan region of Transdnietsr following the halting of supplies from the Cuciurgan thermal power plant, a Russia-controlled supplier located in the region and the largest supplying Moldova, which is causing an electricity crisis for the country that in turn is piling pressure on the government following recent public protests. Our report looks into the negotiations with the region’s authorities during the winter months, and how this, and the reduction in Russian gas exports to Moldova, is likely to affect the economy, social cohesion and the country’s EU aspirations bearing in mind the alternative supplies on offer.

Turning to the Middle East and North Africa, the roster for December features new reports on Qatar and Iraq, where political risk remains very high, despite the formation of an inclusive government dominated by the Coordinating Framework, an alliance of Shiite parties that favors close ties with Iran. The participation of parties representing Sunni and Kurdish interests will provide the government with an added measure of both domestic and international credibility, but the marginalization of the Shiite political forces connected to Moqtada al-Sadr is far from complete, and the Sadrists are more than capable of causing problems for the government that are likely to test the already questionable coherence of Prime Minister Mohammed Shia’ Al Sudani’s coalition.

In our extensive coverage of sub-Saharan Africa this month, we include country updates on the relative risk metrics underlying portfolio choices in Namibia, Niger, Tanzania, Togo, and Uganda, as we look ahead to what investors can expect in terms of asset safety in 2023. As an illustrative example, in Uganda, we look at what impact the recent outbreak of Ebola has had in terms of the government’s responsiveness and its ability to manage the economic repercussions. We also delve into concerns, more generally, about corruption, impending economic fortunes, and the associated tightening of global financial conditions that is also affecting other countries in the region. In particular, we assess the recent rise of inflation into double digits, and its effect on disposable incomes and social stability, as well as the accumulation of national debt on the back of large infrastructure projects, and what it says about banking system stability as debt servicing costs rise.

Coverage of Asia this month includes reports on Brunei and Malaysia, where Anwar Ibrahim has been tapped by the king to form a government after an early election held in November produced a hung Parliament. With Anwar’s PKR and its allies in the PH coalition claiming just 82 seats in the 222-member legislature, the new leader’s hopes of forming a viable government hinge on the cooperation of UMNO, the historically dominant party that has been badly damaged by corruption scandals and factional splits. The pairing of the PH and the UMNO-led BN bloc is a strange-bedfellows partnership that will be difficult to sustain under any circumstances, but especially so if the government encounters political headwinds.

An examination of the policy priorities of the new government, which still awaits confirmation in a confidence vote expected in mid-December, will include an assessment of their impact on the climate for investment and trade, and the analysis will also identify the most likely potential sources of policy-related conflict among the coalition partners. In addition, PRS will assess the potential for fulfillment of populist campaign promises to negatively affect the timeline for shrinking the fiscal deficit, factoring in an anticipated significant deceleration of real economic growth in 2023.

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 ICRG Online and/or World Service Online today to receive political risk updates.

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