This month’s coverage of the Americas includes a new report on Paraguay, where the administration of President Horacio Cartes is keeping its fingers crossed that another default by Argentina, to which the Paraguayan economy is closely tied through co-membership in Mercosur, does not produce a contagion that derails the government’s investment program. Reform measures implemented by Cartes during his first year in office have won a favorable response from debt-rating agencies, and the government is counting on successful bond sales to secure financing for planned state investment in infrastructure improvements. Otherwise, Cartes’ biggest cause for worry is a drop in his popularity, which could weaken the foundation of the quasi-formal alliance the governing ANR-PC has struck with the opposition PLRA. The report will assess the chances of sustaining the arrangement over the remainder of Cartes’ term, looking at the various factors that could prompt the PLRA to distance itself from the administration, including the possibility of a sharper-than-expected deceleration of real GDP growth following a very strong rebound in 2013.

Our coverage of the Middle East and North Africa will include an update on Iran, with analysis focusing on the outlook for a comprehensive nuclear deal that might clear the way for the lifting of the international sanctions that have badly hobbled the country’s economy. The deadline for concluding an agreement has been extended until November, and, in the meantime, Tehran has agreed to get rid of its stockpiles of highly enriched uranium gas, a move that should result in the further partial relaxation of sanctions. The update will also examine the implications of a building political crisis in neighboring Iraq and growing tensions over the Israeli military campaign in Gaza for Iran’s broader diplomatic strategy, which could negatively affect the climate for investment, even in the event of a thaw in relations with the west.

In Africa this month we revisit Kenya to assess the impact of the violence plunging the tourism industry into decline. Our report inquires how the domestic security situation will impact on investors in light of President Uhuru Kenyatta’s decision to repossess illegally acquired tracts of coastal land exacerbating the Muslim militant violence sparked by al-Shabaab insurgents reacting to Kenya’s intervention in Somalia. We explore other negative risk factors, too, ranging from the drought undermining agricultural production, the currency and external indicators, to inflation and corruption impinging on fiscal sustainability in order to assess whether the country’s sparkling Eurobond debut in June (the region’s largest) was accurately priced.

We will also focus on the Democratic Republic of Congo, and assess what appears to be a deteriorating risk situation as the 2016 vote nears. There is considerable speculation that President Kabila will amend the constitution so he can run for a third term – which will do little to help keep the lid social discontent – and the security situation looks increasingly dire. Indeed, a recent attack on a military base in the capital suggests violence has the potential to spread to urban areas. We will also update clients on proposed changes to the country’s mining code, and how the motivation to amend the royalty scheme is being driven by the price of copper and the government’s poor fiscal accounts.

Turning to Western Europe, PRS will discuss the changing fortunes of Spain, which is enjoying a nascent economic recovery but with continuing high unemployment, regular industrial strike action, and a population that is fatigued after years of austerity but also exasperated by one corruption scandal after another. Prime Minister Mariano Rajoy’s Popular Party government is expected to see out its remaining months in office until the next elections in 2015, but predicting the outcome is complicated by the waning support for mainstream parties, including the opposition Socialists. A loosening of the purse strings may buy the government some time to restore its appeal, but investors face further uncertainty from an intransigent Catalonian regional government intent on staging (and winning) a status referendum in November that is not legal according to the constitution. Relations between Barcelona and Madrid are at a low following the failure of conciliatory talks, and with the Catalan Convergence and Union Party shaken by a tax evasion scandal dogging its founder and former, long-serving leader, Jordi Pujol. PRS will unravel the outlook for a Spain riven by divisions and plagued by a government intent on abusing its parliamentary privilege.

A report on Italy will assess the prospects for political and economic reform from a coalition government headed by Prime Minister Matteo Renzi, which is at risk of losing popular support if it fails to deliver on its promises, but also faces pressure to hold an early election to settle the issue of Renzi’s lack of a mandate. Our report dissects the main issues, players, and the stakes involved in deal-making on crucial constitutional reforms aimed at rescuing Italy from the trap of chronic governance crises that has been a central feature of political landscape for the better part of 70 years. The report rounds off with a review of the government’s latest fiscal stimulus measures designed to extract the economy from its prolonged slump, and a forecast of what is in store on the macroeconomic front in 2015 and whether investors can bank on an improving regulatory environment.

Over in Eastern Europe, PRS will produce a new report on Romania, where, as we forecast, Prime Minister Victor Ponta’s presidential ambitions proved to be the undoing of the partnership between his Social Democrats and their Liberal partners in the USL alliance that romped to victory at elections held last year. Ponta still claims a shrunken parliamentary majority, but the reconfigured governing coalition is fragile. Our report will discuss what steps, if any, the government might take in the near term to address concerns that continue to deter foreign investment, and will assess the probable impact of the alternative outcomes of the presidential election on the viability of the PSD-led government beyond this year.

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