This month’s coverage of the Americas includes an update on Brazil, where lawmakers are preparing for a vote to impeach President Michel Temer, who assumed office last year following the removal of President Dilma Rousseff.  The charges against Temer stem from allegations that he and an aide received bribes for intervening in a business deal, and given the strength of the case against the president, there is a high probability that he will be forced to step down at least temporarily, pending an upper house vote on whether to permanently remove him from office.

PRS will assess the implications of the latest crisis for the fate of the reform program that is crucial to pulling the economy out of its current slump and laying a foundation for longer-term fiscal stability.  The update will also assess the impact of Temer’s legal difficulties on the outcome of next year’s presidential and legislative elections, which have also been clouded by the sentencing of former President Luiz Inácio “Lula” da Silva to 10 years in prison following his conviction on corruption and money-laundering charges.  Despite his legal difficulties, Lula continues to lead polls of voter preferences for president, suggesting that a large section of the electorate believes that the ongoing investigation into a massive corruption scandal has become politicized.

Turning to the Middle East and North Africa, we will review recent developments in Iran, where signs of a widening rift between the country’s supreme leader, Ayatollah Ali Khamenei, and the recently re-elected reformist president, Hassan Rouhani, points to a growing risk of a domestic political crisis.  Perhaps more ominously, Rouhani’s election to a second term has been followed by an intensifying power struggle between the president and the Revolutionary Guards, whose animosity toward Rouhani, mainly stemming from the president’s attacks on the military faction’s extensive business interests, creates a risk that the IRGC might seek to undermine Rouhani’s signature achievement by obstructing compliance with the terms of the landmark nuclear agreement that has enabled the country to break free from economically crippling international sanctions.  Our analysis will focus on how the various internal battles might play out over the coming months, and what the alternative scenarios would mean for both regional stability and the climate for foreign investment over the near-to-medium term.

Along with updates on Norway and Spain, our coverage of Western Europe in August will include a report on Finland that assesses the implications of a recent shakeup in the composition of the incumbent center-right coalition government.  The election of a hard-liner, Jussi Halla-aho, as leader of the far-right populist Finns Party prompted the party’s expulsion from the governing alliance, which resulted in a split that saw 19 members return to the government fold as the New Alternative bloc.  PRS will examine how the government’s vastly-reduced parliamentary majority will influence the direction of the upcoming budget negotiations and affect the administration’s ability to implement the structural reforms required to prevent the rapid rise of the debt burden as the cost of caring for an aging population soars over the medium term.  Our report also looks at the recent improvement in economic growth to assess whether it marks a real turning point for Finland, or if there are still major risks ahead.

PRS will also issue a fully revised report on Austria, where we look at the federal elections that are now due to be held early in October, following the collapse of the two-party coalition government sparked by a change of leadership in one of its members.  Our report looks at the big issues defining the political debate and the policies the various parties are offering, and PRS will forecast the likely outcome, how the composition of the next government will affect the business climate, and ultimately Austrian assets. Our report rounds out with a detailed assessment of key macro-fiscal indicators, reviewing GDP growth, inflation, and external balance prospects, alongside projected sovereign debt sustainability.

Shifting to Eastern Europe, PRS will take a look at Bulgaria, where a snap election held in March once again resulted in a victory for the center-right GERB, whose leader, Boyko Borisov, has formed a coalition government with United Patriots, an alliance of three far-right nationalist parties.  Our analysis will include an assessment of the viability of the governing coalition, and the prospects for achieving consensus behind the liberal economic policy program favored by GERB and demanded by Brussels.  PRS will also weigh the risk posed by the presence of the UP in the governing coalition, which is likely to generate among leaders of the EU, especially with Bulgaria set to assume the bloc’s six-month rotating presidency beginning in January 2018, and will likely generate increased pressure from Brussels for progress on rooting out corruption and reforming the judiciary, both of which were conditions attached to the country’s accession to the EU in 2007.

This month’s coverage of Asia features a fully revised report on Hong Kong that examines political developments early in the term of the new chief executive of the Special Administrative Region, Carrie Lam, whose victory against former Financial Secretary John Tsang, the popular favorite, demonstrated once again the bias in the selection process toward figures seen as unflinchingly loyal to the regime in Beijing.  The report will evaluate how Lam is likely to handle the tensions between the pro-establishment and pro-democracy camps in the wake of recent moves by Beijing to strengthen its control over Hong Kong’s governance by stealth.  In that respect, we draw attention to the controversy surrounding the high-speed rail network, and the pro-Beijing establishment’s endorsement of an interpretation of the Basic Law, which provides the foundation for governance under the “one country, two systems” model, that would disqualify pro-independence politicians from serving in the Legislative Council, and how these developments will affect political risk during Lam’s five-year term.  Our report goes on to assess prospects for macroeconomic variables against the backdrop of prospective trends in mainland China.

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