INVESTIR: Insights from the International Country Risk Guide (Summer, 2025)

Summer 2025 Risk Highlights

AMERICAS

Bolivia – Bolivia held its presidential election on August 17^th, with an October 19^th run off vote expected between centrist and right-wing candidates. The government also formed a partnership with El Salvador’s digital asset regulator (CNAD) to help it develop blockchain oversight and crypto regulation and overcome forex shortages.

Venezuela – Despite the presence of US gunboats and the bombing of a boat containing drugs and personnel from the ‘Tren de Aragua’ – deemed as a foreign terrorist organization by the US – consumer behavior has showed signs of increased stability, and an improved use of bolivars, which has helped stabilized inflation.

WESTERN EUROPE

France – As the government of François Bayrou looks doomed, President Macron calls on the governing coalition to work with the Socialists to prepare for the aftermath.  Meanwhile, French consumer sentiment ticked up slightly in July, and French bonds are looking attractive as a longer-term buy.

Lithuania – A new cabinet is being formed, with Social Democrat Inga Ruginiene approved as the new prime minister by the parliament on August 26. The new government will be a coalition formed by the Social Democrats, Nemunas, and the Union of Farmers and Greens. Ruginiene and has 15 days to present the full cabinet list to the parliament for a vote, following President Gitanas Nausėda’s formal appointment. 

EASTERN EUROPE

Romania – The stock market has broken out of a months-long slump, with the country’s benchmark BET index reaching record highs on news that the government will accelerate listings of state-owned firms and expectations that the Bucharest bourse could be upgraded to an emerging-market status by MSCI. 

Serbia – Major clashes erupted throughout the summer, with demonstrating students calling for democratic elections and the ouster of President Vucic. Ruling party offices were attacked and tear gas used on protestors. 

AFRICA

Angola – While major demonstrations subsided by early August, the underlying causes of the protests—including public anger over economic hardship and dissatisfaction with the government—persist. The UN has urged the Angolan government to investigate the use of force during the protests and respect the rights of peaceful assembly and expression.

Nigeria – Fiscal position has improved but inflation is soaring. The approval of President Tinubu is lackluster, with a recent poll finding that general disaffection with the country’s leader.

ASIA

Indonesia – Deadly riots continue in Jakarta and elsewhere, after the government enhanced perks for lawmakers, including housing allowances nearly 10 times the minimum wage in Jakarta. The government has made an about face in the measures.

Mongolia – New prime minister appointed, as most forms of gambling have been outlawed.  However, some 60% say they don’t like the government.  The central bank has about six months of import cover.

MIDDLE EAST

Bahrain – Bahrain authorities are reportedly planning a $1.5 billion international bond sale to refinance its debt ahead of upcoming maturity payments on a $1 billion sukuk due this October and a $1.6 billion bond due next January.  Strong investor interest is fueling the move.

Lebanon – S&P Global upgrades Lebanon’s local-currency credit rating from CC to CCC and maintained its outlook as stable, citing early signs of economic recovery. The country’s local-currency debt shrank from 100% of GDP in 2020 to around 2% at the start of 2025— largely due to depreciation and inflation—and the newly-elected government led by President Joseph Aoun resumed interest payments to the central bank in January.  Banking reforms have much to do with the upgrade as well.

Best political risk (mom)

Bolivia (4.0)

Armenia (2.0)

Brazil (2.0)

Worst political risk (mom)

Botswana (-1.5)

Serbia (-1.5)

USA (-1.5)

Best composite risk (yoy)

Lebanon (12.8)

Sri Lanka (7.5)

Zimbabwe (6.5)

Worst composite risk (yoy)

Congo Republic (-3.8)

Libya (-3.5)

Ukraine (-3.5)

MARKET/ASSET IMPLICATIONS

Bullish

CAD/USD (ST)

Gold (ST)

Silver (ST)

French Bonds (LT)

Bitcoin

Bearish 

USD/CAD

WHAT’S NEW?

Christopher returns to Montreal in September as we begin phase two of the rollout with a pilot project with select clients to test and gain feedback on our unique LLMs.  We will update clients and friends as time permits.

Christopher will also be visiting some of the research team and Paris and will be meeting clients in Istanbul, Budapest, and southern France during the fall months. If you would like to schedule a brief meeting, just let us know at custser@prsgroup.com

The PRS blog offers (almost) daily insights into geopolitical risk events of the week, along with expositions of the new literature using our ICRG and related data.  Christopher also provides a section titled ‘From the CEO’ where he offers synopses of various client calls and questions.  This week, Christopher spoke about how geopolitical risk affects France, how the ICRG ratings have forecasted and adopted the changes to the political and economic landscape over the past several months, and whether there are buying opportunities for investors in French debt!  Have a look if interested: (https://www.prsgroup.com/blog/).

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PRS’ unique newsletter was rolled out during the early part of the summer and will being again in summer once our staff returns from their holidays. The newsletter contains insights into the trends the data have been yielding, as well as news about recent publications, some future podcasts, and specials on various data bundles.  We’re responding to many client requests for more frequent updates to the data as the world becomes increasingly volatile given developments in the US.  The newsletter will be titled ‘Au Courant.’

PRS is closing in on the eight million data point mark in relation to our curated geopolitical risk series!  No other risk firm can offer such depth; nor can they claim the mantle of being consistently used in leading academic scholarship and appearing in the top journals, which, according to JSTOR, now occupies just over 1,000 published articles and book chapters.

This summer was impressive for the continuation of new and returning clients, ranging from universities and hedge funds to central banks.  PRS continues to receive considerable attention from Asia, and our clientele in the Middle East, especially as many of the countries there are taking great efforts to improve the operation environment for foreign capital.

Our ICRG political risk scoring changes were significant in August, with some 102 countries of the universe of 140 being adjusted!  We noticed certain highlights, including a deteriorating political situation in France, unrest in Indonesia, continuing relative instability in Serbia, and ongoing developments internally in the US.

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. The IMF, which has been a client of ours for decades, recently used our data in the Fund’s 2025 Article IV Consultation (1st Review) of El Salvador’s Extended Fund Facility.  Among the findings – and partial support for recommendations – the authors used our ICRG data to show that political and economic stability risk indicators display increasingly significant impacts on FDI trend inflows.  And that improvements in the ICRG Law and Order indicators have strong positive effects, generating cumulative FDI gains exceeding 0.1 percentage points of GDP in FDI trend inflows over a year. (https://lnkd.in/eDtKaFWZ)
 
DID YOU KNOW?

Using our ICRG data, a recent NBER Working Paper asked the question: How does innovation react to foreign political risk? And what are the economic consequences?
Among the findings, sectors and commodities with higher exposure to foreign political risk exhibit significantly greater innovative activity. This conclusion held across sectors in the US, across country-sector pairs in a global sample, and across critical minerals that are essential for modern economic activity. (https://lnkd.in/eEwRi_4N)