Coming Soon in Our September 2021 Political Risk Reports

PRS’ coverage of the Americas this month includes fully revised reports on Paraguay and Suriname, as well as updates on Costa Rica and Canada, where polling data indicates that Prime Minister Justin Trudeau may have blundered badly by calling a snap election that will be held on September 20. Opposition leader Erin O’Toole has assailed the decision to stage an unnecessary national election during a pandemic as a reckless power grab by the prime minister, whose Liberal Party has been trailing O’Toole’s Conservatives by a consistent but narrow margin in the most recent opinion surveys.

The update will include an examination of the policy agenda of the winning party and an assessment of the government’s prospects for implementing campaign promises that will have a direct impact on the investment climate, including taxes and carbon-reduction strategy. PRS will also discuss the latest economic developments and discuss the challenges for the government related to winning the battle against COVID-19 and establishing a solid foundation for a post-pandemic economic recovery.

In Western Europe this month, along with a report on Austria, we lead with an analysis of investor prospects in France by looking ahead to the elections to be held next year which kick-off with the presidential vote in April and will be closely followed by a legislative contest reshaping the National Assembly. President Emmanuel Macron’s popularity has improved in line with the economy, notably after introducing measures to control the pandemic, but a controversial health pass has sparked protests among those fearing it encroaches on their liberties, and his economic record, reforms, and scandals in office will also weigh against him.

Our report looks into the various runners and riders in a competitive contest that is most likely to pit Macron in a run-off against his old adversary Marine Le Pen, the leader of the far-right National Rally, but could involve the center-right Les Républicains if that party can unite behind a single candidate. Our report also identifies the likely legislative make-up, which may well involve a bigger role for LR, and for Michel Barnier, the former European Commissioner and Brexit negotiator, who is also standing for the presidency, seemingly with the aim of positioning himself to be the next prime minister. As well as looking at the prospect of more reforms, French foreign policy, and business sentiment, our report also devotes attention to the deterioration in the country’s fiscal metrics, the possibility of another economic hit in the winter due to COVID-19 variants, and what has suddenly become a bigger inflation problem.

Coverage of Eastern Europe will include an update on Hungary, where a coalition of opposition parties is preparing to hold a primary to choose a joint candidate for prime minister at parliamentary elections that must be held by Spring 2022. It remains to be seen whether all participants in the ideologically diverse alliance of parties will accept the results of the two-stage primary, which will be completed next month, but polling data indicates that the six-party coalition would be in a strong position to deny the incumbent right-wing coalition of Prime Minister Viktor Orbán’s Fidesz and the tiny KDNP a fourth consecutive term. The analysis will discuss how Orbán is likely to respond to the threat, with particular emphasis on the risk of populist gestures that could have negative implications for foreign investors and Hungary’s relationship with the EU.

Along with a report on Vietnam, our coverage of Asia this month includes a fully refreshed analysis of investor risks in South Korea, where we look ahead to the presidential election scheduled for next March that will determine the success to Moon Jae-In, who is required under the constitution to step down following a single five-year term. Our report looks into the prospects for the candidate from Moon’s Democratic Party in light of the elections held in April for the mayoralties in South Korea’s two largest cities, Seoul and Busan, which were held along with voting for two municipal mayors plus a number of metropolitan and municipal by-elections. In the report, we pore over the defining issues, ranging from youth unemployment, income inequality and rising house prices, to the pandemic, North Korea, and rising anti-China sentiment that the conservative opposition People Power Party hopes to capitalize on. We look into the various conservative candidates and the prospect of returning to power, and how that would play out in terms of policymaking and prospective asset returns over the next few years. Our report rounds out by assessing South Korea’s pandemic management, foreign policy, and macro-fiscal outlook in the light of recent trends and the government’s latest budget plans.

Turning to the Middle East and North Africa, the roster for September features a fully revised report on Sudan and an update on Israel that will assess the stability and performance of the coalition government formed in June by a collection of parties united by little more than their shared desire to push Benjamin Netanyahu out of the prime minister’s post for the first time in 12 years. For now, Prime Minister Naftali Bennett and Defense Minister Benny Gantz appear to each be pursuing his own approach to relations with the Palestinians, an arrangement that could reduce the danger of the government’s collapse over the issue, but all but precludes any significant near-term reduction of the security risks that are the main weakness of an otherwise attractive climate for investment.

Other issues receiving close examination include the looming battle over the budget for 2021/2022, which is due to be approved in November, following a preliminary vote this month. The failure to achieve consensus on spending priorities has brought the downfall of several previous governments, and the diversity of Bennett’s coalition will compound the risks on that score.

Over in sub-Saharan Africa this month, along with a report on Côte d’Ivoire, we analyze the recent elections in Zambia which led to victory for the opposition United Party for National Development leader Hakainde Hichilema, who has replaced Edgar Lungu of the Patriotic Front as president in a peaceful transfer of power. Our report assesses what his presidency and command of the legislature will bring in terms of policymaking, and whether the initial wave of confidence is justified. In that light we review the first steps Hichilema has taken to make his mark and reassure the financial markets, in terms of personnel, measures to reinforce the rule of law, address corruption, and boost economic growth. Our report also delves into Zambia’s fiscal crisis and how it is likely to play out with the country eager to secure a lending program with the IMF in the light of prospective copper prices, the sovereign debt servicing profile, and the conditionality the IMF will impose in return for its loans.

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.

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