• Risk iStock_000016809464SmallFrance – the Finance Minister’s EU counterparts are not happy with the country’s failure to abide by budget rules;
  • Germany – Merkel intends to stand fast;
  • Israel – further interest rate cuts ahead; Uzbekistan – playing both sides between Moscow and Washington

BOSNIA & HERZEGOVINA:  The elections last weekend served only – once again – to highlight the non-viability of the country’s convoluted political system, offering no hope for an improvement in policy making. The economy has proven to be reasonably resilient in the wake of disastrous floods, but much now depends on the aid from abroad.

CZECH REPUBLIC:  The party of billionaire Finance Minister Babis strengthened its hold on Czech politics in municipal elections, which will not make things any easier for Prime Minister Sobotka. The economy is growing again and the repercussions from Western sanctions on Russia have been mild to date.

DENMARK:  The economy is recovering, but unevenly and at a very gradual pace. The exchange rate peg to the euro will continue to keep inflation low. Significant among the risks is a housing market that remains far from balanced. Greenland, meanwhile, is in political chaos and headed for elections with hard-to-predict results.

ITALY:  PM Renzi won an important political victory with the approval by the Senate of his outline of labor market reform. He had to establish his credibility as a man bringing change to Italy to underscore his demands
RUSSIA:  Dollar availability has been shrinking fast as the effect of the sanctions is sharpened by the slump in oil prices. Russia is seeking support from China, which is, however, limited. So, Putin’s regime is turning against private Russian enterprises and foreign companies with interests in Russia.

SYRIA:  The country is having growing difficulties meeting even its most basic food import needs. President Assad, however, recently “reelected,” is benefitting from the US campaign against ISIL, while the deal on his regime’s chemical weapons is crumbling.

TUNISIA:  The Islamist Ennahda is apt to put in a strong showing in the upcoming elections, but so may its secular opponents. Fortunately, the two sides have agreed to govern by consensus for the next five years to allow the fragile democracy to grow roots. The economic recovery is still rather tentative and needs security to gain strength.

UNITED STATES:  The US economy has picked up momentum and is now clearly doing better than its counterparts in the highly industrialized world. There are still a number of risks to be considered, many of which are external factors, but some of which originate at home. Meanwhile, time is running out for a US-Europe trade deal.

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