INVESTIR, WINTER 2026: Insights from the ICRG

INVESTIR, WINTER 2026

 AMERICAS

 Canada – Government says it is ready for a ‘non-renewal’ outcome of the Canada-United States-Mexico Agreement (CUSM A) in 2026 if US concessions are too high, potentially creating a y-o-y rolling review. Concurrently, the $5bn Strategic Response Fund will be fully operational in 2026, designed to help firms replace US supply chain components with local or overseas alternatives.

 Argentina – Relations between the government and organized labor become tense over the Labor Modernization Bill, which aims to limit strike activity, allow for 12-hour workdays (under some conditions), et al.  Massive marches have occurred in BA and another national strike is being threatened.

 WESTERN EUROPE

 France – in December, the overall business climate indicator rose to highest since June 2024. Manufacturing performed better than expected while service sector activity fell.  PRS is forecasting real GDP growth in 2026 at roughly 1%, driven by a recovery in private investment and household consumption.

 Italy – The government wins confidence vote in the Senate for the 2026 budget, which significantly affects the business sector, with the banks being targeted by tax hikes. So far, the share prices of the larger banks remain solid, but the ECB warns that the efforts could negatively affect liquidity and lending to the real economy.

 EASTERN EUROPE

 Belarus – Currency stabilizes in Q4; country’s coffers benefit from billions in Russian energy subsidies and trade with the Kremlin surged to over $60 billion in the 24-25 period, effectively replacing EU markets and filling niches by departing Western companies.

 Russia – The crime rate is becoming increasingly worrisome, hitting a 12-year high during the first half of 2025. Organized crime surged by a third and returning veterans – many of whom were recruited from prisons – have triggered a wave of domestic violence.

 AFRICA

 Guinea Bissau – Allegations (even by prominent African leaders) suggest the November coup was a ‘sham,’ staged by the Umaro Embalo – the incumbent – to avoid conceding defeat in that month’s election where leaked results showed him trailing the opposition candidate by roughly 10,000 votes.

 DRC – Recent peace deals prove to be ineffective in reducing the conflict. The M23 has captured the strategic southern city of Uvira. Government militias have begun to emerge as significant threats to peace. Over 7.3 million have been displaced by the conflict as of late 2025.

 ASIA

 Myanmar – The first stage of what is seen as an illegitimate election by the military junta has begun: the NLD is still a banned entity and its leader, Aung San Suu Kyi, remains in prison. The junta really governs between 20-40% of the country; forced military conscriptions are up 24% over the previous year. 

 Philippines – In an effort to reduce corruption in trade, the government has implemented various digital trade reforms (e.g., the BOC e-Submission Portal for high-value consignments).  As of early 2025, almost 97% of customs processes are fully digitalized.

 MIDDLE EAST

 Egypt – Fo the upcoming year, debt servicing – interest and principal repayments – is expected to consume some two-thirds of annual expenditures, with interest payments consuming over 80% of all tax revenues. Instability has resulted in a loss of 50-60% of Suez Canal revenues – a significant source of fx.

 Lebanon – Risk of civil war has increased given the likely failure of the 2024 ceasefire, driven by the year-end deadline for Hezbollah’s disarmament. Israel has warned of a full-scale return to war if security benchmarks are not met by the end of 2025.

 Best political risk (September-December 2025)

 Argentine (3.0)

Brazil (3.0)

Bangladesh (1.5)

Worst political risk (September-December 2025)

 Guinea Bissau (-3.0)

Madagascar (-3.0)

Costa Rica (-1.5)

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

 Lebanon (11.3)

Syria (6.8)

Egypt (5.3)

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

 Ukraine (-4.8)

USA (-4.3)

Mongolia (-3.0)

RISK DATA POSITIONS

 Bullish

South Korean equities

Chinese equities

Taiwan equities

Brazil sovereign debt (v USD)

South African sovereign debt (USD)

EUR

GBP

SEK

Bearish 

USD

Colombian equities

INR 

WHAT’S NEW?

 The New Year is looking bright as PRS moves more fully into the alternative data field, both in primary form and via Ai-enhanced. Our data continues to provide clients with early warning systems and predictive modelling.  Moreover, clients of our longstanding proprietary data series have a unique, defensible competitive advantage that generic, publicly available Ai models cannot replicate.  Once again: Our data drives.

Christopher was at the UN this December for an interesting multi-day conference on measuring corruption. Many of PRS’ clients were in attendance and the insights offered were truly impressive.  The work now being done to reduce corruption in all aspects of doing business with public authorities is becoming more empirical and many of PRS clients are making considerable progress, largely through digitization. 

 As part of our new product development for 2026, PRS is currently in discussion with a French business school for the adoption of a new risk series that will serve to enhance several of our ICRG indicators as they affect forms of external conflict.  We will keep our clients and interested parties abreast of the progress on this score.

 As Christopher continued to conduct end-of-year meetings with clients from Malaysia, France, and Qatar, PRS surpassed the eight million data point mark in relation to its curated geopolitical risk series!  According to JSTOR, our ICRG series alone has been used in over 1,000 published articles and book chapters.

 Clients should note that our popular Researchers’ Dataset (RDS) series – containing updates from 2025 – will be available in January 2026.  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 asset prices, inflation and monetary policy, the economic costs of war, youth unemployment and political stability, and much more.  Contact us at custserv@prsgroup.com to acquire about acquisition of the RDS updates.

 December and indeed the fall months were terrific 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 larger consultancies, 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. For example, in a recent study published in Conflict, Security, and Development, ICRG data was used to establish a causal link between economic conditions and social unrest.  The authors of the work found that a decrease in real wages significantly increases the risk of internal conflict, especially in nations already experiencing elevated baseline tension.  Interestingly, the study discovered that while wage decreases trigger conflict, subsequent wage increases do not consistently reduce existing conflict, except in cases of extreme political violence. 

(https://www.sciencenorway.no/forskningno-norway-social-economy/economic-under-development-leads-to-civilunrest/1432197#:~:text=The%20researchers%20tested%20the%20causal%20relationship%20between,concrete%20cases%20of%20civil%20unrest%20and%20revolts.)

DID YOU KNOW?

Using our ICRG data, an NBER Working Paper investigated how corporate innovation reacts to foreign political risk using ICRG metrics.  The study found that when foreign political risk increases, domestic firms often accelerate innovation as a form of strategic hedging to reduce dependence on risky international supply chains and partners. (https://lnkd.in/eEwRi_4N)