Coming Soon, September 2023

PRS’ coverage of the Americas this month includes reports on Cuba, Uruguay, and Mexico, where President Andres Manuel Lopez Obrador (AMLO) is set to begin the final year of his single six-year term, which will likely be devoted to ensuring that his Morena party retain control of the presidency and its dominant position in the Congress at elections in early June 2024. The analysis will include an examination of developments on the security front and other chronic contributors to risk, as well as a discussion of how an anticipated deceleration of growth in the run up to the elections might influence the populist incumbent administration’s economic policy choices, and how they might impact the business climate.

Coverage of Western Europe features reports on Austria and Greece, where the center-right ND secured a fresh four-year mandate at a snap election held in June, after falling just short of winning an outright majority at an election held the previous month. The use of a bonus-seat system in the second vote helped the ND to achieve a comfortable eight-seat majority in the 300-member Parliament, providing a solid foundation for government stability and policy continuity.

The analysis will include a discussion of the top items on the new government’s agenda, which include early repayment of bailout loans and regaining an investment-grade credit rating for the first time in 13 years. The report will also assess the near-term economic outlook and the prospects for reconciling Prime Minister Kyriakos Mitsotakis’ pledge to achieve consistent primary surpluses amounting to 2% of GDP with promises of tax relief and additional spending on measures to shield households from elevated living costs, and the risk of failing to deliver on either count.

In Eastern Europe, the spotlight is on Czech Republic and Bulgaria, where a protracted political impasse that produced five elections in two years came to an end in May with the conclusion of a power-sharing agreement between the long-dominant center-right GERB and the centrist DB-PP bloc. PRS will assess the prospects for sustaining the arrangement, which provides for the rotation of control of the prime minister’s post at nine-month intervals, and implementing an agenda that includes numerous contentious items. In particular, the analysis will examine the risk implications of the new government’s pledges of judicial reforms and a concerted attack on corruption, both of which are essential to maximizing the economic impact of billions of euros in EU financing, access to which was impeded by the extended bout of political instability.

Turing to the Middle East and North Africa, PRS will report on United Arab Emirates and Saudi Arabia, in each case taking a close look at how political leaders are using the fiscal windfall generated by higher prices for oil and gas and friendly overtures from economic powers looking to reduce their dependence on Russian energy supplies to their advantage. The analysis will include an examination of the impact on internal political stability, the progress on economic diversification, and the foreign policy priorities of the Gulf kingdoms, including relations within the regional GCC.

Coverage of Asia this month features a report on Hong Kong, where a government crackdown on democracy undertaken on orders from Beijing has continued under the leadership of John Lee Ka-chiu, who replaced Carrie Lam as the SAR’s chief executive last year. The analysis will discuss the implications of the mainland government’s tightening control for the local business climate, including an assessment of how mounting evidence of looming economic difficulties in China that could spell political trouble for the regime in Beijing might affect the mainland government’s relationship with Hong Kong and the risks for foreign investors operating in the SAR.

Our coverage of Asia is complemented with a brief update on the present situation in North Korea, where saber-rattling is commonplace and there have been rumors of famine and even a failed attempt to assassinate Kim Jon Un emanating from the hermit kingdom. Our report tries to gauge the country’s internal politics, the role of Kim’s sister, Yo Jong (the source of much propaganda), and how the international community is likely to respond to Pyongyang’s latest ballistic missile tests, including a simulated nuclear assault on South Korea. We go on to assess whether the regime intends to re-open borders that have been closed since the pandemic, and how this will impact on the limited tourism and trade that normally takes place, as well as the implications of selling arms to Russia for its war in Ukraine. Our report rounds out, not only with a perspective on North Korean economic risk, but also whether, and how, it will impact on assets south of the border.

Along with a report on Tanzania this month, our coverage of sub-Saharan Africa includes a timely update on what is next for Gabon in the wake of a recent military coup – an eighth in the region in three years – soon after the elections were held that unsurprisingly led to another clear, but disputed victory for President Ali Bongo. Our report delves into what prompted the takeover now, which has led to the president and other members of the corrupt regime arrested and has put General Brice Oligui Nguema in charge. It assesses whether this truly marks the end of the Bongo dynasty stretching back to the 1960s, when the president’s father took over, and how long the country is likely to be devoid of civilian rule. Our report also looks into how all of this this is likely to play out in terms of policymaking, and the country’s overall attractiveness to foreign investors, bearing in mind the reaction of international donors and creditors, and in that light we trace out prospects for key macro-fiscal variables for the remainder of 2023 and into 2024.

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