Coming Soon in Our May 2018 Reports

This month’s coverage of the Americas includes a revised report on Bolivia, where the top court issued a verdict in November that clears the way for Evo Morales to seek a fourth term as president in 2019. The move is very controversial, not least because voters explicitly rejected a proposal to revise the presidential term limit by a wide margin at a referendum held in February 2016. Widespread opposition to the extension of Morales’ tenure is likely to reinforce the apparent erosion of popular support for both the president and the governing leftist MAS. Although that trend gives the government an incentive to court foreign investors in potentially lucrative industries such as lithium mining, it also creates a risk that Morales will resort to populist and nationalist gestures that create problems for foreign firms.

The report will examine recent developments, including progress toward inking a $1 billion investment deal with Germany’s ACI Systems to produce and market lithium-ion batteries, as part of a process of assessing the role of foreign investment in the Morales administration’s electoral strategy, and what that will mean in terms of political risk for investors over the next 18 months. PRS will also discuss the potential for the 2019 elections to produce a change of regime, and how that might impact the business climate over the medium term.

This month’s coverage of Western Europe looks at the main political themes running through Ireland, Luxembourg, Norway, and the Netherlands, with Brexit the one overriding concern posing a particular conundrum for Ireland given the border issue splitting the south, an EU member, from the north, remaining part of the UK, considering their substantial bilateral trade dependency. In Norway, we look at recent domestic political instability caused by the controversial Minister of Justice Sylvi Listhaug resigning, and how the hydrocarbons extraction industry and the economy more generally are coping following the negative oil shock and subsequent revival of prices to $70 per barrel, looking at the oil industry’s investment plans, Norges Bank’s likely monetary policy steps, and management of the sovereign wealth fund. In the Netherlands we look at what the recent local elections and rejection of the Dutch Intelligence and Security Services Act in a referendum mean for national politics and coalition unity while also weighing up the recent resignation of Foreign Minister Halbe Zijlstra, and the political storm over dividend tax affecting the investor environment. For all these countries we also present up-to-date forecasts of the main macro-fiscal indicators influencing prospective returns.

Turning to Eastern Europe, PRS will issue an update on Russia, where, to no one’s surprise, President Vladimir Putin won a six-year extension of his mandate at an election held on March 18. Although the voting was marred by irregularities, Putin made his strongest-ever showing, winning more than 75% of the vote. On that basis, there is little reason to expect that he will deviate significantly from a political strategy that has relied on acts of disruption and destabilization abroad and claims of unfair persecution of Russia by hostile neighbors to create a distraction from the Putin regime’s failure to invigorate a torpid economy.

The report will examine the weaknesses of the business climate and assess the prospects for action by the government to address some of the more glaring ones, including rampant corruption. PRS will also assess the government’s broader economic policy strategy, and what it portends for macroeconomic performance over the five-year forecast period.

Shifting to the Middle East and North Africa, the May roster includes a fully revised report on Saudi Arabia, where Crown Prince Mohammed bin Salman is continuing to consolidate his political control even as his father, King Salman, remains on the throne. The crown prince is attempting to implement a program of economic and social reform at home while simultaneously taking aggressive action beyond the kingdom’s borders to check the influence of Iran in the Persian Gulf. The results on both fronts have been mixed, at best, and it is not at all clear that Mohammed can count on the reliable support of powerful factions within the royal family if the failure of his policies prompts challenges to his authority from within the House of Saud.

The report will assess the prospects for success of various components of Mohammed’s ambitious reform agenda, and what a positive or negative outcome will mean for the kingdom’s risk profile more broadly. PRS will also discuss the outlook for the economy, which will have significant implications for the political backdrop against which the crown prince will attempt to implement his reforms.

As well as covering Angola and Uganda in detail this month, our coverage of Sub-Saharan Africa leads with an extensive update on Nigeria, the continent’s largest economy. We look in detail at the political risk environment following the recent declaration by President Muhammadu Buhari that he intends to seek re-election in 2019. In addition to assessing the potential for instability within the ruling coalition leading up to the vote, the report identifies the main opposition forces Buhari will face, and examines the recent rise in inter-communal violence challenging the authorities and threatening more election-related instability. On the macro-fiscal situation, we look at the difficult ongoing passage of the 2018 budget bill through Parliament and what it means for public spending and other key metrics, including the deficit and debt situation feeding into Nigeria’s credit ratings. We assess recent efforts to bolster trade and investment, both at the country-specific and continent-wide levels, and what investors can expect from the government in terms of implementing structural reforms proposed by the IMF affecting the regulatory environment and the war on corruption. Our report rounds out focusing specifically on key macro indicators, including projections, influencing the naira and prospective returns.

Our coverage of Asia this month includes reports on Myanmar and Thailand, as well as Malaysia, where an early general election will be held on May 9. The vote is expected to produce a fresh mandate for Prime Minister Najib Razak’s incumbent Barisan Nasional coalition, despite the 1MDB state investment fund scandal favoring the opposition coalition Pakatan Harapan now reinvigorated by the inclusion of former Prime Minister Mahathir Mohamed, who is standing as the opposition’s candidate for the top spot in the government. PRS will analyze the election results in detail, and what investors may expect in terms of key figures in the new administration overseeing policymaking during the new five-year parliamentary term, as it gets to grips with the key issues of corruption, stagnant wages, and the rising cost of living, and shapes the business environment. Our report goes into detail on monetary policy and other factors influencing the ringgit and inflation beyond the elections. We look at export prospects, taking on board the global trade outlook, and assess broad-brush indicators of economic growth, external economic risk, and the liquidity situation, as well as setting out trajectories for fiscal variables in comparison with other emerging markets in the region.

For details Contact Us, or explore a subscription to PRS Online and/or ICRG Online today to receive full updates.

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