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Country Risk Climates: Trends To Keep an Eye On

  • Country Risk1 300Mauritius – the rupee seems to have regained its balance;
  • Trinidad & Tobago – shortages of FX still persist, delaying payments;
  • Venezuela – worsening relations with the US.

BOSNIA AND HERZEGOVINA:  The European Union has decided to move ahead with a pre-accession pact, in the hope that the Bosnian leadership will stick to its reform commitments. This is a considerable gamble, given the fractured nature of what is called government in this “country.” The EU understands, however, that time is of the essence.

BULGARIA:  After a tough two years in which it had to cope with five governments, street protests and a banking crisis, the country is getting back to a semblance of normality. The economy is showing modest growth and the focus currently is on extending a fence along the Turkish border, this one to keep people out, not in.

CHINA:  Official statistics for the first quarter confirm the economic slowdown that everyone knew was in the making, but also that, for now, nothing worse than a soft landing need be feared. The authorities will continue to move gingerly in applying what stimulus they can. They are pushing, meanwhile, to accelerate the internationalization of the yuan.

FINLAND:  The new PM does not represent a big ideological shift from the old one and the incoming government will again be a multi-party one. But the country is in difficult straits and the Russian sanctions are not helping. The financial markets still treat the country with respect, however, S&P’s rating cut last year notwithstanding.

JAPAN:  Economists around the globe have been quick to declare Abenomics a failure. Actually, there are positive signs, except not where traditionalists had expected them. Critical reforms are still missing, but this is not to say that nothing has been achieved.

KOREA (SOUTH):  The economy is continuing to make progress, albeit not at the clip the authorities would want. This has led to a debate between the government and the Central Bank as to which should head an effort to stimulate. Debt risks have been alleviated by changes in the mortgage law.

MALAYSIA:  The economy continues to do well, with positive effects from the global oil price plunge offsetting the negative ones. Consumer spending remains a prop for growth. The political risks are growing, however, and this is significant also for the economy, as Malaysia is vulnerable to volatility in investors sentiment.

SOUTH AFRICA:  The weakness of the rand was supposed to aid exporters and put some pep into the economy, but the beneficial influence has been offset by the latest eruption of anti-immigrant violence and, in some places, by uncertainty about electricity supplies. Additionally, there is growing concern that the Reserve Bank may have to raise interest rates to fight inflation risks.

This page is provided by S.J. Rundt & Associates, Inc., specialists in country risk assessment, consultants to multinational companies & banks, and publishers of Rundt’s World Business Intelligence and The Financial Executive’s Country Risk Alert. To order a subscription or individual issues of these reports, in print or by e-mail, contact S.J. Rundt & Associates, P.O. Box 1572, Montclair, NJ 07042; Telephone: (973) 731-7502, Fax: (973) 731-7503; E-mail: [email protected];  Web site: www.rundtsintelligence.com.

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