This month’s coverage of the Americas includes a new report on Venezuela, where President Nicolás Maduro has tightened his grip on political control, but the economic misery that has fueled mass opposition to the socialist government shows no sign of easing.  A 40% increase in the minimum wage announced recently in a bid to dampen public discontent will stoke inflation, which hit quadruple digits last year, as the depletion of the central bank’s foreign-exchange reserves continued to drive up the black-market cost of dollars and contributed to severe shortages of essential goods.  Against that backdrop, the risk of sovereign default is growing, as sanctions imposed by the US have created a new obstacle to making timely payments to lenders. Standard and Poor’s has already declared the government to be in default following a missed payment in November.

The report will examine the options available to Maduro’s regime, and what they mean for both the risk of default and the stability of a government that has relied on extraconstitutional maneuvers and the backing of the military to remain in power.  More broadly, PRS will discuss the implications of Venezuela’s political and economic crises for a business climate that is among the most inhospitable in the world, and explore under what circumstances conditions might improve over the next five years.

In addition to an update on Switzerland, this month’s coverage of Western Europe includes a fresh assessment of how the minority Liberal-led government in Denmark is faring since Prime Minister Lars Løkke Rasmussen reached formal coalition agreements with the Liberal Alliance and the center-right KF near the end of 2016.  PRS will examine how “bloc politics” is affecting the government’s policy choices and its ability to roll out key reforms, ultimately with a view to assessing the stability of the current administration, and of Danish assets, in the period leading up to the next parliamentary elections to be held by June 2019.  Our report rounds out with an inspection of the government’s tax plans in the context of the budget bill for 2018, and we report on key macroeconomic variables and risk indicators, detailing recent developments and prospects for the coming year for GDP growth, inflation, balance of payments, and important credit risk indicators affecting the banking sector.

Turning to Eastern Europe, PRS will issue a new report on Russia, where President Vladimir Putin is all but certain to secure a six-year extension of his mandate at elections scheduled to be held in March.  More than 60 individuals have declared their intention to run for the presidency, but election officials have rejected the candidacy of Alexei Navalny, the only opposition figure with the stature and gravitas to pose any threat (however small) to Putin’s claim to office.

With Putin remaining at the helm, Moscow will continue to pursue a provocative foreign policy course that contributes to persistent tensions with NATO, and provides the US with justification for tightening existing sanctions.  The report will discuss Putin’s likely policy response to external pressure on his regime with regard to foreign investment and trade, and the anticipated impact of his choices on the domestic business climate and the economic outlook through 2023.

Shifting to the Middle East and North Africa, the December roster includes a revised report on Egypt, which is preparing to hold a presidential election in the first half of 2018.  Although President Abdel Fattah el-Sisi has largely failed to deliver on his promises to restore economic stability and internal security, he will be favored to win a second term in the likely event that he chooses to seek reelection.  There are clear signs that the government is using its control of the courts and the security services to intimidate or disqualify potential challengers, a strategy that will be facilitated by a recent three-month extension of a state of emergency imposed in response to terrorist attacks.

The report will focus on what foreign businesses can expect in the event of a victory for Sisi, as well as less likely regime scenarios.  The current administration’s willingness to implement unpopular policies is a testament to Sisi’s recognition that his government will remain dependent on assistance from the IMF for the foreseeable future.  In addition to discussing his policy options beyond this year’s election, the analysis will assess his prospects for securing majority support in the Parliament for a reform agenda, which will be crucial with regard to both opportunities for foreign investment and the elimination of structural obstacles that currently deter investment.

Our sub-Saharan Africa coverage this month includes revised reports on Botswana, Ghana, and also Côte d’Ivoire, where the issue of presidential succession in 2020 dominated the recent party congress of the main governing RDR, following the unexpected decision of the septuagenarian President Alassane Ouattara to step down as party leader before the completion of his second and final term.  The report will assess how the jockeying for position among would-be successors might affect both the unity of the RDR and the sustainability of the party’s alliance with PDCI over the next few years.

The report also examines in detail the country’s financing situation in the light of the continued sluggishness of commodity prices, the government’s infrastructure plans, and the controversies surrounding the West African CFA franc, a currency that Côte d’Ivoire shares with seven other countries.  In conclusion, we assess the prospects for an improvement in economic fortunes following a year in which plummeting cocoa prices, labor strikes, army mutinies, and a decline in construction caused many problems, and considerable uncertainty for investors.

Turning to East Asia and the Pacific, our coverage this month includes an update on the economic and political risks affecting Hong Kong, where the administration of Chief Executive Carrie Lam faces pressure from Beijing to maintain internal order ahead of by-elections on March 11 to fill the legislative seats made vacant by the court-ordered removal of popularly elected opposition lawmakers.  PRS will assess the potential for a near-term revival of the mass protests that resulted in Beijing’s loss of confidence in Lam’s predecessor, and the degree to which the local government’s plans to tighten restrictions on political speech by criminalizing displays of disrespect for the national anthem point to a broader undermining of the special administrative region’s political autonomy, which is the foundation of China’s “one country, two systems” strategy.  We also look in depth at anticipated developments in the economy, focusing on exports, tourism, and fiscal indicators, all of which are greatly influenced by the SAR’s symbiotic relationship with the mainland.

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