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Coming Soon in Our July 2021 Political Risk Reports

PRS’ coverage of the Americas this month includes an examination of the risk for business stemming from widespread unrest in Colombia and growing disenchantment with the political leadership in Brazil, as well as analysis of the mid-term election results in Mexico and the prospects for any improvement in the abysmal conditions in Venezuela. We will also publish an update on the situation in Chile, where the electorate is gearing up for presidential and congressional elections in November, following a recent vote to choose the members of the Constitutional Convention tasked with overhauling a government charter drafted during the period of military rule.
The update will discuss the implications of the ideological composition of the Constitutional Convention, which will be dominated by independents who in the main lean to the left, for the country’s long-term approach to economic development. Key considerations in that regard include the potential for tighter environmental regulations that limit the potential for opportunities in the mining sector. Our analysis will also include an assessment of the near-term impact of a general election that is expected to feature a strong showing for center-left parties, and the update will also provide forecasts for key macroeconomic variables, taking into consideration the effect of stubbornly high numbers of COVID-19 infections, which have persisted despite the broad success of the government’s vaccination effort.
As well as reports on Australia and Thailand this month, our coverage of Asia contains a fresh update on the situation in Hong Kong since the authorities imposed a new security law in 2020 prompting student-led violence and a backlash from western partners, worsening Sino relations. Our report looks at the current state-of-play for investors in the Special Administrative Region, analyzing the crackdown on democracy protestors, journalists, and politicians, as well as moves to further bias the political process and exert more authoritarian control over one of the world’s formerly most attractive outposts that has lost its luster to westerners in comparison with safer domains such as Singapore. We look at how the security law is impacting government stability, free speech and self-censorship in light of a recent bomb plot and major newspaper closure as well newly proposed privacy laws imposing severe sanctions on individuals for “doxing”, the term used for publishing personal information about individuals or companies on the internet. Such restrictions are deemed to be another nail-in-the-coffin for democratic freedoms in Hong Kong by major tech companies that are now threatening to pull out, despite Chief Executive Carrie Lam’s offer to discuss the issue, and her protestations that only illegal doxing is being targeted. With all that in mind we look at how these issues will play out at the Legislative Council elections scheduled for December that were postponed last year due to the COVID-19 crisis. We also look at how the territory is coping with COVID-19 and how it will influence macro-fiscal variables through to 2022.
In addition to a report on Switzerland this month, identifying the main risks to investors positioning in the franc and Swiss assets, our coverage of Western Europe devotes attention to the political crisis in Sweden following the late-June collapse of Prime Minister Stefan Löfven’s Social Democrat-led minority left-of-center government. As well as describing how the crisis came about in response to differences over housing policy among its support partners, our report looks at whether government stability can be assured given the dispersion of voting sentiment that has led to the rise of the far right as the third biggest force, and kingmaker for legislation. With that in mind we assess the prospects for policymaking for the rest of the year through to the next elections to be held no later than September 2022, and whether the opposition center-right can stage a comeback to oust Löfven from power. Against this backdrop our report also looks at recent conflict between government and the Riksbank over proposed changes to central bank law, and controversy surrounding Sweden’s antibribery laws. We also analyze and project key macro-fiscal variables to gauge the relative safety levels for investors committed to Swedish assets, and whether the krona’s resistance to political risk and the country’s strong creditworthiness are guaranteed to endure.
Coverage of Eastern Europe will include an update on Slovakia, where political stability continues to be undermined by disagreement among the parties in the governing coalition over how to manage the health risks from COVID-19. Prime Minister Igor Matovic resigned under pressure over his decision to obtain supplies of Russia’s Sputnik vaccine without consulting his Cabinet and the government’s more recent failure to reach consensus on the use of “vaccine passports” creates an impediment to easing health restrictions, an obstacle that has clouded the outlook for a strong economic rebound in 2021. In addition to discussing what the government’s legislative priorities portend for the business climate, the update will assess the chances that the combative coalition partners might overcome their differences and avoid an early election that would create a distraction from the task of mending the economic damage caused by the pandemic.
Over in Sub-Saharan Africa we feature Botswana this month. Our detailed report looks into how the country is coping with the pandemic as well as the latest domestic political changes influencing the investor environment, including a minor cabinet shuffle in April which saw Thapelo Matsheka ousted as the Minister of Finance and Economic Development and replaced by Peggy Serame, who is suspected to be President Mokgweetsi Masisi’s niece, prompting speculation he is positioning her to be his running mate as Vice President for the next elections not due until 2024. As well as looking into the implications of this move, we also look at how the power struggle is developing between Masisi and the Botswana Democratic Party’s secretary general, Mpho Balopi, whose poor health is leading to pressure for him to step aside from frontline politics and how this will affect political factions and the presidential race eventually. On other relevant matters to investor interests we look into the government’s investor-related policies, and how corruption can impact business dealings, notably concerning a rise in cases brought to light by the City Council governing the capital Gabarone and alleged interference in the workings of the Directorate of Public Prosecutions which is signaling political obfuscation in high profile cases under investigation. Our report goes on to look at regional issues, including Botswana’s role in the Mozambique crisis, and rounds out with projections of key macro-fiscal variables in the light of commodity price trends and the evolution of the pandemic, to assess the main risks to the currency and investments in the country.
Turning to the Middle East and North Africa, the roster for July features updates on United Arab Emirates and Kuwait, where a decades-long power struggle between the royally appointed government and the popularly elected Parliament shows no sign of abating, despite both a change of rulers and a general election that refreshed the National Assembly in late 2020. The current bone of contention is a motion approved in March that prohibits parliamentary grilling of the prime minister, Sheikh Sabah Al-Khalid, through the end of next year. Although the government managed to secure approval of the budget for 2021/2022 earlier this month, obstruction by the parliamentary opposition has posed an obstacle to progress on the implementation of reforms that are crucial to diversifying the oil-dependent economy.
The analysis will include an assessment of the prospects for constructive cooperation between the executive and the legislature, and an examination of which reforms are most likely to make their way through the parliamentary gauntlet. The update will also discuss the challenges for officials attempting to resuscitate an economy that contracted by close to 10% in real terms last year and provide an assessment of both the fiscal and growth implications of an expansionary post-pandemic policy strategy.
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, or explore a subscription to PRS Online and/or ICRG Online today to receive political risk updates.


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