Coming Soon, August 2023

PRS’ coverage of the Americas this month includes reports on Honduras, Argentina, and Ecuador, which will hold an early election on August 20 to choose a replacement for President Guillermo Lasso and refresh the 137-member National Assembly, with the winners serving through the scheduled end of the current term in 2025. Pre-election polling points to a likely victory in the presidential contest for Luisa González, the candidate of the Citizen Revolution Movement, a leftist party with close ties to exiled former President Rafael Correa that put in a strong showing at local elections held in February. The analysis will include a discussion of the risk implications of the Correistas’ possible return to power, particularly about fiscal policy and debt management, as well as an assessment of the prospects for any government produced by the elections to stem a wave of drug-fueled violent crime that reinforced the collapse of public support for Lasso. PRS will also review the policy implications for results from referendums on oil exploration in the Yasuní National Park and mining in the Chocó Andino region that will be held concurrently with the presidential and legislative elections.

Coverage of Western Europe features reports on Sweden and Switzerland, which will hold federal elections in October. The reports will examine developments in the country’s relationship with the EU, in particular, the implications of the fractious governing coalition to achieve a comprehensive treaty to replace a nexus of individual accords with Switzerland’s European trade partners. The report will also discuss the implications of continued strong support for the anti-immigrant Swiss People’s Party for policy moves that might address investors’ concerns with regard to the availability of labor. PRS will round out the analysis with an assessment of key macroeconomic indicators, looking at recent and prospective trends for economic growth, inflation, unemployment and the trade balance, as well as the central bank’s interventionist monetary policy influencing the Swiss franc.

In Eastern Europe this month we include a timely update on the political situation in Moldova, as Russia’s war with Ukraine continues to impact on the region. Our focus is once again on the separatist breakaway state of Transnistria, on the Ukrainian border, where around 1,500 Russian troops are based, much of Moldova’s industrial infrastructure is sited and some of its electricity is still produced (from Russian gas). Our report looks into how the conflict and the Transnistrian situation are playing out on the domestic political scene, looking closely at the involvement of Ilan Shor, the Israel-born pro-Russian oligarch, and his eponymous party, creating mischief on Vladimir Putin’s behalf. We go on to address the political clashes that are also occurring between the pro-EU government and the prosecutor’s office over a proposed corruption regulation amendment that is viewed as an essential element of the country’s judicial reforms, as well as current prospects for a range of key macro-fiscal indicators affecting investor risk.

Turning to the Middle East and North Africa, the roster for August features reports on Egypt and Kuwait, where snap elections held in September 2022 and June 2023 failed to break an impasse between the royally appointed government and the elected Parliament that has resulted in chronic political instability and impeded the progress of structural reforms required to diversify the oil-dependent economy. The report will assess the government’s prospects for making even modest headway on reforms and the options available to royal leaders if the opposition majority in the 50-member National Assembly refuses to cooperate. The analysis will include near-term forecasts to key macroeconomic variables and a discussion of the medium-term fiscal challenges implied by the continued stalling of the reform agenda.

In sub-Saharan Africa, PRS will update the risk assessments for Guinea and South Africa, where President Cyril Ramaphosa avoided impeachment in late 2022, but remains tainted by corruption allegations that figure to weaken popular support for the long-time incumbent ANC at elections in 2024. The report will discuss the risks stemming from the growing danger that the governing party could lose its majority status, including the possible resort to populist pandering, and examine what such a development could mean for investors and pre-election economic performance.

In addition, we’ll also look at what comes next for Niger following a swift coup d’état in July, which continues the worrisome trend of military takeovers occurring across the Sahel region. The coup has led to the pro-Russian presidential military guard overseen by General Abdourahamane Tchiani remove from office the democratically-elected president, Mohamed Bazoum and his government. Invariably, such action has brought stern rebuke from numerous world leaders and international institutions, including France and the Economic Community of West African States (ECOWAS) threatening sanctions. However, it is not clear whether France, or other interested parties will also seek to intervene militarily to restore civilian rule in a country that is a key ally in the war on Jihadi terrorism and an important source of commodity exports, including gold and uranium.

Coverage of Asia this month includes reports on Australia and China, where President Xi Jinping’s consolidation of power, underscored by his re-election to a custom-breaking five-year term last year, leaves him largely unconstrained as he pursues his political objectives. The report will examine the risks related to Xi’s aggressively expansionary foreign policy strategy, which has implications for foreign companies operating on the mainland, as well as in Hong Kong and Taiwan, and PRS will also discuss the impact of recent policy departures, including Beijing’s abandonment of a “zero COVID” strategy in late 2022, on near-term economic performance.