INVESTIR: Insights from the ICRG, April 2026.

AMERICAS:

Cuba- Fuel shortages and frequent blackouts continue. The national grid collapsed multiple times in March 2026 alone. The US demands President Díaz-Canel’s resignation for assistance. Approximately 30,000 barrels of fuel have been shipped specifically to private entities.

Peru: Jose Jeru Balcazar, a former judge and leftist, is elected interim leader. Elections are on April 12th, with a likely June 7th runoff. However, Peru benefits from record-high metal prices and a robust mining investment pipeline. Private investment is expected to top $50 billion in 2026.

WESTERN EUROPE:

 Italy- Voters reject a judicial reform backed by Meloni’s right-wing coalition, weakening the government’s ‘aura of invincibility’ and emboldening the center-left opposition. Meloni initiated a reset of her government, resigning scandal-hit officials. Public debt reached 137.9% of GDP in 2026. The EU’s Excessive Deficit Procedure (EDP) obligates a government to cut its structural deficit by 0.5% to 0.6% of GDP annually, which presents problems for defense spending. 

Spain- The debt-to-GDP ratio is projected to fall below 100% for the first time since 2019 by the end of 2026. Prime Minister Sánchez unveiled a €5 billion emergency package to mitigate the economic impact of the war. Spain reportedly reached the 2% NATO target in 2025 by increasing its defense budget to €33.5 billion. However, Sánchez refused to meet the newer 5% target demanded by the Trump administration, calling it “not intelligent” for Europe.

EASTERN EUROPE: 

Kazakhstan- The March referendum saw a 90% approval rate for a new constitution that would replace the bicameral parliament with a unicameral “Kurultai” and reinstate the Vice President, appointed directly by the President. Kazakhstan might be a potential target for Vladimir Putin due to its long border with Russia and Russian rhetoric questioning its historical statehood. The government is betting on the Middle Corridor, a trade route connecting China to Europe via Central Asia and the Caspian Sea, bypassing Russia entirely. 

Russia: Moscow is purportedly providing Iran with real-time satellite data and targeting information, according to multiple US and EU intelligence reports. A delegation of Russian lawmakers visited DC in for talks with Congress, despite Russia’s denial. These meetings, organized by conservative Republicans, represent a significant diplomatic opening in years aimed at discussing potential peace terms for Ukraine. The rising cost of oil has improved Russia’s risk profile, funding the war, bolstering support for Putin, and weakening sanctions. 

Angola: President Lourenço’s second and final mandate ends in 2027. Two factions have emerged within the ruling MPLA party. Maneuvering has accelerated since the late 2025 appointment of Adão de Almeida as Speaker of the National Assembly, positioning him as a leading ‘modernist.’ While the war has caused debt sell-offs in other emerging markets, Angola’s credit spreads have narrowed by 39 basis points since late February, reflecting increased investor confidence in its debt repayment ability. Inflation remains high, and the risk of social turmoil persists despite government efforts to suppress dissent. Growth is expected to be revised upward from 3.2% to 4% this year.

Togo: Despite being far from the war, the country is grappling with skyrocketing food and fertilizer prices and a ‘hidden war’ against jihadists in the north. Despite a 6.5% growth this year, inflation has risen from 0.4% to 1.8%.

ASIA:

Bangladesh- The Nationalist Party (BNP), led by Tarique Rahman, secured a decisive two-thirds majority and was sworn in as Prime Minister. Voters also approved the ‘July Charter’ in a national referendum, which includes imposing prime ministerial term limits, enhancing judicial independence, and creating a new upper house of parliament. Bangladesh imports over 80% of its crude oil from the Middle East, and the closure of the Strait of Hormuz has sent import bills soaring, putting pressure on foreign exchange reserves. A prolonged Middle East conflict could wipe out up to 3% of Bangladesh’s GDP over the next two years. The government is exploring deeper security and trade ties with Pakistan, Turkey, and Saudi Arabia, and has expressed interest in joining an international stabilization force in Gaza.

Vietnam – A leaked military document from February 2026, titled ‘The 2nd US Invasion Plan,’ reveals Vietnamese planners’ secret preparations for a possible American ‘war of aggression.’ The document classifies the U.S. as a ‘belligerent’ power and expresses fear that the US might use global instability to foment a ‘color revolution’ to oust the Communist Party. Inflation might reach 2.5% to 5% rise if global oil prices remain above $100.

MIDDLE EAST:

Oman- Despite multiple strikes in March, has become the central ‘workaround’ for global trade, absorbing rerouted cargo and fuel demand from the crippled Gulf region. Tehran labels these incidents as ‘false flag’ operations, specifically blaming Israel for attempting to drive a wedge between Iran and its last remaining Gulf neighbor. Duqm, the only major Gulf port outside the Strait of Hormuz, can stay operational if the Strait is fully blockaded.

Saudi Arabia: While a neutral stance in the conflict, denying airspace or base use for strikes, Crown Prince Mohammed bin Salman (MBS) reportedly told President Trump the war is a historic opportunity to reshape the Middle East. Riyadh may enter the war if Iran threatens the Red Sea, the Kingdom’s last maritime export route. A prolonged war could cause a 3% GDP contraction and a 12% oil output drop due to infrastructure damage and Strait of Hormuz closure. Investment growth in AI and defense spending is expected. The Oversight and Anti-Corruption Authority (Nazaha) investigated 383 suspects in January 2026 alone, making the push more credible to foreign investors by institutionalizing transparency during this period. 

Best political risk (Month-on-Month, 2025)

Angola (1.5)

Colombia (1.5)

Gabon (1.5)

Worst political risk (Month-on-Month 2025)

Qatar (-8.5)

Kuwait (-6.0)

Saudi Arabia (-6.0)

Best composite risk (Year-on-Year, March 2025)

Zimbabwe (4.5)

Argentina (3.8)

Hong Kong (2.8)

 Worst composite risk (Year-on-Year, March 2025)

Iran (-15.8)

Botswana (-5.5)

Qatar (-4.5)

 RISK DATA POSITIONS

Bullish

Energy/upstream oil and gas

USD/short duration cash

CAD

CHF

Bearish

10-30 yr sovereign notes (UK gilts, US treasuries)

JPY

EUR

THB

Gold

INR 

WHAT’S NEW?

The ongoing conflict in the Middle East has garnered significant attention, with now a mind-boggling array of commentaries and analyses examining the trajectory and implications of the war. For PRS/ICRG, the conflict has emerged as a pivotal factor in the re-pricing of systemic risk across global markets. Indeed, since mid-January, our client discussions – and the work of PRS risk governance board – have highlighted the increasing use of ICRG’s 22 political risk metrics to discount asset values. These metrics prioritize the erosion of ‘institutional stability’ and the consequent geopolitical risk premium.

Empirical data from the current 2026 conflict cycle supports a direct correlation between these ratings and sovereign credit spreads. Specifically, a 10-point decline in a country’s composite risk rating is associated with a 106-basis point increase in sovereign bond spreads. This sensitivity underscores the internalization of the war’s impact on variables such as External Conflict and Government Stability by debt markets. Consequently, the cost of capital for regional actors has significantly increased.

Furthermore, the sub-components of the guide have demonstrated substantial predictive power. One risk sub-metric associated with the ICRG’s External Conflict has exhibited a statistically significant downward trend three months prior to the initial March 2026 strikes, serving as a leading indicator of kinetic escalation. Additionally, an institutional resilience threshold has emerged that, given an Investment Profile score of 7.5, countries maintaining scores above this mark appear to exhibit three times higher market resilience and lower capital outflows compared to those falling below it, even when subjected to direct drone or missile strikes.

The ongoing conflict has also fragmented the risk profile within the Economic and Financial Risk indices. Net energy exporters like Angola and Russia are experiencing improved Budget Balance/GDP ratios given oil prices surpassing $100 per barrel. Conversely, net energy importers such as Italy, Japan, and Togo will likely witness a deterioration in their Inflation and Current Account/GDP ratio, which should lead to heightened risk-premium requirements from international lenders.

Specific variables pertaining to Religion in Politics and Internal Conflict are currently serving as the primary indicators of long-term regime resilience. They determine whether the war’s impact remains a tactical disruption or becomes an embedded structural risk.

Interestingly, a comparative analysis of West African energy exporters and the Gulf Cooperation Council (GCC) reveal a notable divergence in how the conflict is restructuring sovereign risk. While both regions are theoretically ‘winners’ of oil prices exceeding $100, the specific components of their risk profiles—institutional resilience versus sovereign liquidity— look to be moving in opposing directions. This divergence has distinct implications for international capital allocation.

In the GCC, the primary narrative revolves around the erosion of the ‘security premium.’ Despite the fiscal windfall from elevated energy prices, which has boosted their Economic Risk scores, the political risk subcomponents for External Conflict and Government Stability are negatively affected. The direct targeting of critical infrastructure in Saudi Arabia and the UAE by Iranian drone and missile systems – as just two examples – has challenged the long-held assumption of regional ‘safe-haven’ status. Moreover, we are considering the ICRG’s Religion in Politics and Internal Conflict sub-scores to account for potential domestic repercussions from a prolonged regional conflict. These downward pressures on the political risk scores will be neutralizing the gains in the Financial and Economic Risk indices, resulting in a kind of ‘sideways’ trend in composite risk scores.

In contrast, West African energy exporters such as Angola and Nigeria should be experiencing a ‘pure’ fiscal improvement. Due to their geographical isolation from the kinetic theater of the conflict, their scores for External Conflict have remained stable relative to their Middle Eastern counterparts. The ICRG Budget Balance/GDP and Current Account/GDP ratios for these nations are moving, indicating a substantial influx of foreign exchange that is being utilized to service external debt and narrow sovereign credit spreads. For these entities, the war has provided a unique opportunity for sovereign deleveraging, where the increase in economic scores is not being offset by a simultaneous decline in domestic or regional security metrics.

The takeaway for institutional portfolios lies in the Investment Profile sub-score. While GCC states will hopefully maintain scores above the critical 7.5 threshold in the face of physical threats to their infrastructure, West African exporters will be approaching this threshold from below. This suggests a rare rebalancing of the risk-reward frontier: the GCC is transitioning from a low risk, moderate return profile to a moderate risk environment, while select West African exporters are shifting from high risk toward a moderate risk, high liquidity status. We will closely monitor the Internal Conflict variable in West Africa to determine whether this newfound fiscal breathing room will be utilized for structural reform or merely serve as a temporary cyclical cushion.

Clients should note that our popular Researchers’ Dataset (RDS) series – containing updates from 2025 – is available along with a range of related data series.  The RDS series – derived from our ICRG data – continues to yield unique insights in a range of topics that explore the impact of political risk on conflict and economic growth, inflation and monetary policy, youth unemployment and political stability, and much more.  Contact us at custserv@prsgroup.com to inquire about acquisition of the RDS updates.

March was a very impressive month for new and returning clients, ranging from some of the world’s top universities to the largest institutional investors throughout the US, Europe, the UK, and the Middle East and Asia.   Our data have become increasingly popular with the data demands of sovereign wealth funds, helping them and their clients in assessing geopolitical risk over time and across 141 countries, and in relation to issue-specific concerns, such as supply chain security.

 ACADEMIC HAPPENINGS

 As always, ICRG and related PRS data continue to be the gold standard of all geopolitical risk data among the scholarly and research communities. In a recent piece in Energy Economics, the authors looked at the extent to which political risk shape prices for international crude.  Using our ICRG data and an empirical analysis based on the SVAR models, it was found that OPEC’s integrated political risk contributes to 17.58% of the oil price fluctuations in the sample period, which is only lesser than that of the oil demand shocks (34.64%). Moreover, among the eight components of the political risk in OPEC, the internal conflicts contribute most to the oil price fluctuations in the sample period.
(https://lnkd.in/euvvCcEf)

DID YOU KNOW?

Using our ICRG data, a 1% reduction in political risk spreads, partly derived from our ICRG data, is associated with a 12% increase in net inflows of FDI? (https://www.nber.org/system/files/working_papers/w19786/w19786.pdf)