The Risk Report series, supported by the Funk Foundation, offers a new analytic approach to assess political risks and their potential consequences in 25 countries. An analysis of the country’s most important conflict lines, influential people and upcoming events reveals the impending changes in a country. Against the backdrop of entrepreneurial decision-making in light of direct investments or transactions the series also shows how these changes affect the attractiveness of overseas sites.
All reports will be published and downloadable by mid-July on this website. Reports will be available on Iran, Belarus, Turkey and Egypt, and many more.
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Risk Report Poland (05/2018)
Could Poland lose its position as the top investment location in Central and Eastern Europe? Poland is the third-largest consumer market in the region, attracting investors and international companies with its strong economy, well-developed infrastructure and a considerable high-skilled labor force. However, since 2015, Poland, which remains the largest recipient of EU cohesion funds, repeatedly made negative headlines, inter alia with controversial judicial reforms. In addition to subsequent tensions with Brussels, the confrontational course of the ruling right-wing conservative PiS party has raised heightened uncertainty for foreign companies about political stability and Warsaw’s future economic policy. Amid this highly volatile situation, international partners and investors are advised to pay attention to a number of scenarios.
Risk Report Vietnam (05/2018)
With planned economy out of the picture, has Vietnam become a “socialist republic” in name only? In the past decades, Vietnam has written a unique economic and developmental success story. Once among the world’s poorest, the country had continued on the path of reform since the 1980s and has fully opened up to globalization. Companies benefit from low wages, subsidies and tax benefits – many of them have even already relocated their production, from China to there. Nevertheless, in order for Vietnam to follow the path of a Best-Case-Scenario and remain an island of stability in Southeast Asia, reforms are needed especially in the judiciary and in the fight against corruption.
Risk Report Mexico (05/2018)
Not only due to its geography, Mexico has become a dynamic location for trade and investment in Latin America. Since 2000, it has a free trade agreement with the European Union, German companies alone employ more than 130,000 people in the country. Despite extensive reforms, the outgoing government of Pena Nieto had not succeeded in also boosting growth rates. New uncertainties loom large, given repeated US threats to terminate NAFTA in the case that new rules of origin can’t be agreed upon. The outcome of the Mexican presidential elections in July and its implications act to the challengers the country faces in its near future.
Risk Report Iran (05/2018)
In 2019, the Islamic Republic of Iran celebrates its 40th anniversary. The country, one of the richest countries in terms of resources, has an tremendous economic potential, also because of its approximately 80 million inhabitants, among them many young and well-educated. Both in terms of foreign and security policy, however, the country is facing difficult times ahead. Tehran’s great hopes to escape the decade-long state of international isolation with the JCPOA treaty concluded in 2015 and sanctions partially lifted also threaten to be shattered. At the same time, political and economic reforms are unavoidable also within the country if Tehran wants to prevent a resurgence of recent protests. Which are scenarios beyond the worst-case that could play out for Iran?
Risk Report South Africa (05/2018)
After nearly ten years in office, South African President Jacob Zuma cleared the way for Cyril Ramaphosa in February 2018. Although anything but a newcomer to politics, Ramaphosa had openly opposed corruption and nepotism in state institutions, and his election raises hopes for necessary structural reforms, including in economic policy. In recent years, political instability has unsettled investors as well as devastating agency ratings. In order for the “newcomer” to regain the lost confidence of both South Africans and foreign companies and avoid that the worst-case scenario of an economic collapse will become reality, he will need to quickly create better conditions and enhance legal certainty.
Risk Report Belarus (05/2018)
Will Belarus be able to do the splits between Moscow and Brussels? Often described as Europe’s last dictatorship, Belarus has been under President Alexander Lukashenko’s autocratic rule since 1994 and is considered internationally isolated. Protests in 2017 were followed by increased levels of domestic repression. At the same time, Minsk is seeking better relations with the West, lifting the visa requirements for EU citizens in 2017, along with a liberalization of the digital economy that is seen as revolutionary for the country. Given the current confrontation between Belarus’ key international partners, which are the scenarios likely to expect for the country’s future?
Risk Report Argentina (02/2018)
Argentina is the second largest economy in South America, it is equipped with rich natural resources and attracts investors with comparatively well-trained personnel. However, many foreign companies are put off by the 2001 experience of national bankruptcy and the economic policy under the former presidential pair Kirchner. With the election of the new president Macri, new opportunities are opening up for investor-friendly policies.
The future of the country will depend on how well Macri handles the pressures applied to him by the street and the opposition. The scenarios deal with three different outcomes.
Risk Report Italy (02/2018)
Italy is one of the most important economic powers in the European Union; it is among the 10 largest economies in the world. Yet, due to stricken banks, a crushing tax burden and extreme national debt, which massively restrict its political leeway, Italy is also among the EU states that signal a comparatively higher risk. Over the last months there have even been discussions about an Italian exit from the EU.
The scenarios deal with what kind of consequences the elections in March 2018 and the formation of government might have for the country: From the “sick man” to the model student of Europe – will the election results pave the path for a European economic crisis or will Italy manage to build a broad government coalition and become a strong, reform-oriented, European partner?
Risk Report Saudi Arabia (02/2018)
Saudi Arabia – at present the world’s biggest oil exporter and with a high political influence in the Golf region – is undergoing a process of change. The reform project “Vision 2030” proposed by the new crown prince Mohammad bin Salman is aimed at diversifying the country’s economy, strengthening the fields of education and research and attracting more foreign investors and tourists. Within the population as well as in the extended royal house, opposition against this encompassing reform project has been growing.
The future of Saudi Arabia therefore depends on the successful realization of these reform plans. The scenarios illustrate how a reform failure might affect the liberalization of the country, as well as its relations with neighboring states. However, a moderate implementation could be also possible, at the end of which there would be an improvement of the human rights situation and a political and economic environment that is profitable for investors as well.