- Egypt – lower interest rates won’t perk up the economy;
- Greece – Resistance within the IMF against more aid to the Hellenic nation;
- India – more FX controls;
- Zimbabwe – another disputed election?
BRAZIL: While many investors have soured on Brazil, this is certainly not true for all of them. Calls for a return by Lula da Silva are getting louder, even though, for now, Pres. Rousseff is still well-positioned for the next elections and he seems utterly un-inclined to consider a come-back.
GREECE: Athens will receive EUR 5.8 billion from its bailout program and, if all goes well, another EUR 1 billion in October. Domestic resistance against the austerity regime is mounting, however and this still makes the “if” a big one. The economy may start to turn around this year, but any recovery will be slow and halting.
MOZAMBIQUE: The country is on the cusp of huge resource developments that have created a rush of mining and gas companies to its shores. There is a growing danger, though, that the vision of mineral wealth exacerbates tensions between the government and its former civil-war foe, which could greatly increase the downside risks.
ROMANIA: The government and the IMF have agreed on a precautionary loan, to provide a cushion for unexpected blows. This year’s financing requirements will be easily covered even though economic growth will pick up only modestly. The banking sector is going through some difficulties, but remains well-capitalized. The external accounts will stay manageable.
SPAIN: Spain’s jobless rate, while seemingly staggering, is not all that meaningful, but reliable signs of an incipient recovery have yet to emerge. In the political arena, PM Rajoy is under growing pressure to resign over a corruption scandal, but he is in a position to struggle on to the next election.
TAIWAN: The economy picked up momentum in the second quarter, but weakness in foreign demand will keep the overall recovery at a slow pace. The government’s efforts to forge new business opportunities with trade agreements are subject to political constraints that Taipei needs to keep in mind at all times.
TUNISIA: Prompted by the country’s main labor union, the Prime Minister has proposed fresh elections in December. In the interim, unfortunately, the government, in a caretaker position, is unlikely to push the structural reforms the country urgently needs.
TURKEY: The country risk begins to warrant increased attention as the Central Bank’s interest rate hikes and credit tightening are proving less than effective in retaining and/or attracting the international hot money needed to finance the current-account BoP deficit. The regime is not exactly helping matters by blaming its political problems on the chimera of an “interest lobby.”