Coming Soon in Our October Political Risk Reports

PRS’ coverage of the Americas this month includes reports on Haiti, Suriname, and Costa Rica, where President Rodrigo Chaves has struggled in the early months of his tenure. The president’s business-friendly reform agenda has been impeded by the administration’s lack of legislative support, and Chaves has come under fire over alleged official harassment of critics in the media. Our analysis will include an assessment of Chaves’ prospects for establishing a basis for constructive engagement with the opposition and a discussion of what failure to do so would mean for both the climate for business and Costa Rica’s near- and medium-term economic performance.

In addition to fully refreshed reports on Belgium and Finland this month, our coverage of Western Europe takes a look at the recent snap election in Italy and what investors can expect from the prospective coalition comprising the right-wing parties Brothers of Italy and Lega, and the center-right, business-minded Forza Italia, which is still led by the irrepressible media tycoon and former prime minister, Silvio Berlusconi. The prime minister in waiting, Giorgia Meloni, is promising to tackle energy costs, and her government will undoubtedly take a tough line on immigration as Italy adopts a more socially conservative agenda akin to that in Hungary. Attendant risks include worsening of relations with European partners, a nationalist bias that favors local companies over foreign firms, and a rise in domestic social tensions. With this in mind, our report weighs up the new government’s plans and how they will impact on economic growth, inflation and sovereign debt amid huge economic challenges already presenting themselves. We also look at how far the government will go in clamping down on civil rights and liberal freedoms, and what effect it will have in terms of social stability and punitive measures from the EU, as well as the foreign policy direction.

Coverage of Eastern Europe will include a report on Bulgaria, which held a snap election in early October, a vote necessitated by the collapse of the ungainly and ideologically diverse coalition headed by Prime Minister Kiril Petkov just eight months after its formation. Unfortunately, the result has not improved the prospects for creating a more viable alternative. The center-right GERB has reclaimed its status as the largest party, but will need the backing of its traditional rivals to achieve a parliamentary majority. GERB leader Boyko Borissov has appealed for all pro-EU parties to join forces amid a crisis in Europe and has sought to overcome the reservations of prospective partners by declaring that he will play no role in the new government. The analysis will include a discussion of possible coalition scenarios and an assessment of the stability and effectiveness of each, and what that implies for risk in terms of Bulgaria’s position at the front lines of the war in Ukraine, the country’s ability to make use of investment financing from the EU’s post-pandemic recovery fund, and the ongoing effort to address key weaknesses of the investment climate, including corruption.

Turning to the Middle East and North Africa, our coverage in October will include reports on Morocco and Algeria, which has become a target of western diplomatic wooing since the Russian invasion of Ukraine created an imperative for Europe to seek out alternative sources of oil and gas. State-owned Sonatrach recently signed a $4 billion oil and gas production deal with Italian, French and US investors, and a fiscal windfall from high oil prices has enabled the government to spend its way to social peace, despite a steep rise in food prices. Algeria’s improved financial position and enhanced diplomatic leverage point to favorable conditions for implementing structural reforms that will be essential to creating a basis for long-term economic stability. The report will assess whether President Abdelmadjid Tebboune seems to be prepared to meet the challenge, and discuss the risk implications of a missed opportunity. 

In addition to a report on the political and economic risks affecting oil-producer Angola, our coverage of sub-Saharan Africa this month includes an up-to-date assessment of Zambia, which recently secured a new three-year lending arrangement with the IMF worth $1.3 billion supporting reforms and providing essential budget financing. Our report assesses the likely impact of associated aid and credit lines from other lenders and the macroeconomic conditionality attached to the IMF’s lending on Zambia’s economy and debt sustainability. The analysis includes an examination of the criticism leveled at the forecasts on which the IMF program is based and an assessment of the current inflation problem and other economic difficulties the country is facing. PRS will also discuss how the government is politicizing the clampdown on corruption to target the pro-Russia former president, Edgar Lungu, contrasting this with how the more pro-western stance adopted by President Hakainde Hichilema will play out on a domestic political stage that has become highly charged against a backdrop of soaring costs, austerity, and authoritarianism. 

Over in Asia, our coverage this month includes a timely update on the crisis in Myanmar in the wake of the recent conviction of the ousted national leader Aung San Suu Kyi, and armed conflict reigniting, as we look into how the internecine strife is affecting the country, its economy, and impacting on foreign investors. Over in Taiwan, we look at how recent provocations from Beijing following House Speaker Nancy Pelosi’s visit are affecting the island’s domestic politics, its foreign relations and economic outlook, bearing in mind that borrowing rates are also rising. We assess prospects for the island’s key semiconductor industry, and we look at how the current administration led by President Tsai Ing-wen is responding to the external threat, plus how this will play out in the upcoming local council elections to be held in late November.  Our report also looks into the current state of play regarding a prospective trade agreement with the US and moves to establish stronger diplomatic, trade, and investment ties with other allies.

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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