• Iran – a key beneficiary of loosened sanctions will be the Ayatollah Khamenei;
  • Thailandpremature rumors of a debt default;
  • Venezuela – yet another indirect devaluation of the bolivar.

ALGERIA:  The campaign for the presidential elections has gotten under way, but it is not yet known whether the incumbent Bouteflika will run for a fourth term. Either way, there are not likely to be any major policy changes. The economy is slowing and the country’s external position has started to weaken, although it is still very strong.

ARGENTINA:  The regime keeps adding to the restrictions intended to put a brake on capital flight, but with little success. It is also trying to resolve disputes with creditors as it seeks a return to the international capital markets. The peso is still losing ground, driving up the cost of imports and leading to ever higher inflation.

AUSTRIA:  The new government has come to an understanding with demonstrating students and civil servants and should now enjoy a more peaceful period. Although the economy is in relatively good shape it is in need of basic reforms, which will, however, most likely not be attempted by the latest version of the Grand Coalition.

HUNGARY:  The CB cut interest rates further this month, but slowed the pace of the reduction in light of the Fed’s QE-3 tapering. Even so, the forint is headed for a continued decline, in large part because of the government’s determination, ahead of elections, to force the banks to swallow more of the exchange-rate losses stemming from foreign-currency mortgages and other loans.

IRAN:  President Rouhani will be the first Iranian leader in a decade to visit the World Economic Forum in Davos, where he will undoubtedly be received as a “moderate” man of compromise and peace. In fact, though, Israeli PM Netanyahu is closer to the truth, calling him “a wolf in sheep’s clothing.”

LEBANON:  The strain that the war in Syria is putting on Lebanon’s tenuous coherence is growing and regional powers are exacerbating the problem. The danger is increasing that the hostility between rival groups, which is already bursting out of politics and into violence, will lead to a debacle on a much larger scale.

ROMANIA:  With inflation slowing, the CB has cut the key interest rate to a record low to perk up lending and the economy. The government is trying to calm fears in Western Europe, now that restrictions on its workers’ ability to move to other EU lands have been lifted, but the real problem is the brain drain Romania has to cope with.

TURKEY:  It remains unlikely that the crack-down on the judiciary and the police will seriously damage PM Erdogan politically. It will, however, greatly complicate negotiations with the EU and has contributed substantially to the steep fall of the lira.

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