Coming Soon, October 2023

PRS’ coverage of Western Europe this month features reports on Germany, Turkey, and Belgium, where the seven-party “Vivaldi coalition” headed by Prime Minister Alexander De Croo is showing worrying signs of disunity just eight months ahead of a general election. The stability of the ideologically diverse governing alliance has been shaken by a visa scandal involving Foreign Minister Hadja Lahbib and the defeat of a major tax-reform bill, both of which have contributed to tensions between the liberal MR and its coalition partners. The report will discuss how the signs of discord in De Croo’s government might affect the post-election coalition scenarios, including the potential for one or both of the Flemish separatist parties to secure a place in the next government, and what that could mean for policy making and Belgium’s relations with the EU over the next five years.

Turning to the Middle East and North Africa, PRS will report on Morocco, Sudan, and Iran, where political allies of the dominant conservative faction of the clerical establishment will be looking to further solidify their control at parliamentary elections scheduled for March 2024. The analysis will include an assessment of the prospects for a breakthrough in talks to fully revive the 2015 nuclear agreement and whether a compromise short of that goal would be sufficient to contain the risk of conflict with Israel, which views a nuclear-capable Iran as an existential threat. The report will also examine the potential impact of a partial easing of sanctions under a “less for less” arrangement with the US on economic performance and the climate for investment and discuss how preparations for the inevitable departure of Supreme Leader Ayatollah Ali Khamenei could affect political stability and policy decisions in the near term.

In sub-Saharan Africa, PRS will be looking at Angola, where a reinvigorated opposition is continuously testing the unity of the governing MPLA, which retained its parliamentary dominance (and, thereby, the presidency) with a significantly diminished majority at elections held in August 2022. The recent initiation of a push to impeach President João Manuel Gonçalves Lourenço is almost certainly doomed to failure but highlights the main opposition UNITA’s strategy of applying continuous pressure on the administration as it grapples with implementing sometimes unpopular structural reforms aimed at addressing the key sources of political and social discontent.

The report will examine the investment opportunities implied by the reform agenda and assess the prospects for successful diversification of a heavily oil-dependent economy over the medium term. PRS will also provide near-term economic forecasts, looking closely at how the balance between oil prices and production is likely to affect efforts to ensure fiscal, price, and currency stability.

Coverage of Asia this month features reports on Myanmar, Papua New Guinea, Philippines, and India, where Prime Minister Narendra Modi’s BJP is looking to build momentum ahead of the 2024 parliamentary elections by piling up victories at the five state elections still to be held this year and has a chance to deliver a knockout blow to the opposition if it can unseat Rahul Gandhi’s INC in Rajasthan and Chhattisgarh, two of the three states in which the main opposition party still heads the government.

Modi will continue to lean heavily on a populist strategy that combines generous welfare spending and appeals to Hindu nationalist sentiment to provide him with the political capital required to implement the structural reforms that are key to unleashing India’s massive economic potential. Our analysis will focus on the implications of that strategy for both fiscal and domestic political stability, as well as the risks arising from India’s increasingly intense rivalry with China, and how those factors will impact the risk for investors over the next five years.

Our coverage of Eastern Europe this month includes a timely update on how the Nagorno-Karabakh crisis is affecting Armenia, and its foreign relations, as it pivots towards western allies and away from Russia’s influence. We also delve into another brewing conflict involving Serbia, with border tensions heightened since May following municipal elections in the ethnic-Serb dominated areas of northern Kosovo that led to NATO deploying peacekeepers. In a region where the wounds of the bloody conflict which forced the break-up of the former Yugoslavia are clearly not fully healed, the allegations of a Serbian military build-up and attacks on northern Kosovo are a worrying reminder of a fragile peace, the risk of this causing open conflict and its impact on trade and investment, with the EU already threatening to sanction Belgrade. Our report looks into whether Serbia will be minded to annexe the disputed region and how this will impact on east-west relations, bearing in mind the war that is still raging in Ukraine. In our short update we look at how this is playing out on the domestic political scene in Serbia as a welcome distraction from recent public anger over domestic shootings, and its ability to become a potential asset with the prospect of early local and parliamentary elections looming.

Our coverage of sub-Saharan Africa also features a brief update on Burkino Faso, with our report looking into how the junta is faring since it took over the country a year ago, putting the young 34-years old captain Ibrahim Traore in power following the ouster of the democratically elected president Paul-Henri Damiba and dissolution of his transitional government (and the Constitution) on the basis of failing to deal with the Islamist insurgency. Recently, reports of another coup have surfaced, highlighting disquiet within the military, which casts some doubt over the willingness to stage elections by July 2024, as originally stated, especially since the junta has now cut ties with France, forcing French forces to leave the country despite Jihadist threats that are raging across borders throughout the Sahel region. Our report looks into how these issues will play-out into 2024, and what it will mean for the country’s regional and international relations, noting in particular the impact on aid and credit flows, and the business environment in general.