Coming Soon in Our February 2019 Political Risk Reports

In addition to fresh analyses of Canada and the United States, PRS’ coverage of the Americas this month includes a fully revised report on Venezuela, where the opposition-controlled National Assembly has declared Nicolás Maduro’s claim to the presidency to be illegitimate, and earlier this month swore in its own leader, Juan Guaidó, as head of government on an interim basis.  Guaidó has secured recognition of his authority from the US, the EU, and the OAS, but Maduro retains the loyalty of the Venezuelan armed forces, creating the potential for a rapid escalation of deadly violence and possibly even foreign military intervention.  At the same time, sanctions imposed by the US and others will deepen an already devastating economic crisis, and increase the probability of a catastrophic sovereign default.
The report will examine the options available to Maduro, and discuss the implications of each for both political and economic risk in both the near term and the next five years.  Key factors in that regard include the incumbent regime’s prospects for securing desperately needed financial assistance from Russia or China, both of which have affirmed their diplomatic support for Maduro’s government, and what can be expected from the military as domestic tensions continue to escalate.  An assessment of how the domestic opposition and the international community might respond to a seizure of power by military leaders will figure centrally in the analysis.
As well as looking closely at both Iceland and Austria this month, our coverage of Western Europe includes an update on Spain, which will assess the potential for an early general election, possibly in May, when votes are already scheduled to fill seats in local, regional, and European assemblies, as part of a broader examination of whether the next national election (which is not required until July 2020) might produce a more stable government than the current minority administration headed by the center-left PSOE.  We will look at the key personnel shaping the political environment, and how Catalonia’s independence movement, still-high unemployment, and a worsening global economic outlook are likely to play a role in the outcome, and to see what investors can come to expect in terms of policy-making as we focus on budget priorities and their impact on the business environment, the labor market, and fiscal targeting through 2020.
Over in Eastern Europe, the focus will be a revised report on Russia and an update on Ukraine, where voters will go to the polls in late March to elect their president.  Opinion surveys point to a close three-way race among the incumbent, Petro Poroshenko, former Prime Minister Yulia Tymoshenko, and actor-director Volodymyr Zelensky, who has no political experience, but has risen to first place in recent opinion surveys in large part by professing to share the incorruptibility of a character he played on television.
The fragmentation of support among several candidates, the electorate’s embrace of a populist outsider who some suspects sees his own candidacy as satire, and reports of Russian efforts to meddle in the election process all point to an elevated risk of chronic political dysfunction that will add to the uncertainty surrounding the prospects for resolving an eastern rebellion backed by Moscow and sustaining a still-fragile recovery from the deep economic downturn triggered by the 2014 political crisis.  The update will preview the first-round of voting, and assess the likely outcome of alternative matchups in a run-off contest that will be held in April.  A key element of the analysis will be an examination of the challenges for the eventual victor with regard to building a majority coalition in the Parliament, with an eye toward the legislative elections that are required by late October.
Turning to sub-Saharan Africa, PRS will issue reports covering Botswana, Democratic Republic of the Congo, Sierra Leone, and Tanzania, along with an update on South Africa, where we ascertain whether the country’s dismal investor performance in recent years linked to heightened political risks and poor economic performance is likely to continue or reverse in 2019.  Our primary focal point is the national elections to be held in May, at which the incumbent African National Congress (ANC) is favored to retain its majority, providing President Cyril Ramaphosa with a mandate to press ahead with a program of liberal economic reforms.  In addition to exploring the potential for an election upset, against the background of the ongoing “state capture” inquiry into the political influence of the powerful Gupta family and a new corruption scandal emerging at the state pension fund, PRS will also assess how tensions within the ANC between supporters of Ramaphosa and members who remain loyal to his ousted predecessor, Jacob Zuma could affect efforts to address issues related to debt sustainability, unemployment, and the balance-of-payments that will impact the value of the rand and other assets over the coming months.
Looking at Asia, PRS will publish a detailed report on the investor risk outlook in Vietnam this month. We analyze the relations among key actors within the higher echelons of the Communist Party, and dissect details on the latest crackdown on “subversives” wrapped-up in an anti-corruption purge and new cyber-security legislation affecting both social stability and the ability of corporations to operate unimpeded.  On that matter, we report on steps taken by Google, Facebook, and other technology companies to comply with, or challenge, requirements for ‘in-country’ data storage, and how the issue is likely to develop over the coming months.  Our report also looks closely at how foreign relations and economic reforms will impact on the business environment, noting how moves to foster new trade pacts will affect foreign investors and growth prospects, and we round out the analysis by discussing the outlook for key macroeconomic variables in the light of rising global and regional challenges by probing into key issues, including fiscal financing.
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.