The government will continue to spend large amounts on subsidies intended to appease the public and while there are plans to cut budgetary spending to rein in the deficit it is nonetheless expected to remain at around six per cent of GDP this year. Would-be investors will also be deterred by instability and foreign direct investment is likely to decline as a result. A return to pre-crisis GDP growth levels is therefore unlikely and Manama will fail to compete with Doha and Dubai at attracting investment in the crucial financial services and hospitality sectors.
Following the declaration of a health emergency by the city of Campo Grande due to an outbreak of dengue fever, it is likely that a growing number of cases will arise in other states.
Central African Republic
Members of the Seleka rebel group expressed discontent with the terms of the peace agreement signed with President François Bozizé, which makes a resumption of hostilities possible.
Bank lending practices to several industries are likely to be tightened, after a newspaper considered the mouthpiece of the Communist Party warned that if excess capacity is not reined in it may result in China’s uncontrollable economic collapse. Still, many needed economic reforms will face substantial opposition from vested interest groups, particularly those with political positions that benefit from involvement in state-monopolies.
Rural development is a key part of peace negotiations between the government and FARC; but the government will unlikely agree to all of the FARC’s proposals, which will be an obstacle to the discussion of other topics.
President Mursi declared a month-long state of emergency in the cities of Suez, Port Said and Ismailia on 27 January. This came after days of rioting in the towns in response to the sentencing of a number of football rioters to death for their part in violence that killed dozens in Port Said in 2012. Unrest has also escalated in recent weeks following the anniversary of the 25 January revolution, highlighting the ongoing instability that will continue sporadically throughout 2013.
Public unrest will continue to be a risk due to the socio-political polarisation created by the election, exacerbated by the inclusion of the wife of former exiled president Manuel Zelaya as a candidate. Political divisions created by the focus on emotive issues such as land re-distribution, security, violence and poverty will only increase this likelihood.
The eviction of Somalian refugees by Kenyan authorities from urban areas to rural camps like Dadaab, may lead to the forced transfer of up to 55,000 people. The move could spark further conflict and deepen animosity towards migrants.
French and Malian troops secured the city of Gao on 26 January, taking control of the airport and a strategic bridge across the river Niger. A French column also secured the airport in the city of Timbuktu and were clearing Islamist fighters from the city centre on the morning of 28 January. Insurgent forces put up little resistance and were reported to be retreating northwards towards the city of Kidal, the last major town in Mali under Islamist control.
Several indicators including satellite imagery of the country’s nuclear test facility and an official announcement that North Korea will carry out ‘high-level’ nuclear tests suggest that Pyongyang may soon test a new uranium-based nuclear weapon. Such a test will increase already heated tensions in the region and may lead to China temporarily cancelling its aid donations to the country.
Papua New Guinea
The opposition party, led by Belden Namah, announcement that it is withdrawing its support for the government’s proposed extension of a grace-period regarding votes of no-confidence will make the measure harder to pass and thus make PNG’s record of unstable and unpredictable politics is likely to continue.
Low-level violence and protests should be expected in the coming days as inter-community tensions remain heightened following a 2,000 person protest against the removal of a memorial to Albanian fighters in the town of Presevo and attacks at Serbian Orthodox cemeteries and buildings in northern Kosovo, likely in retaliation for the memorial’s removal.
The government will face calls for an early election following the withdrawal of junior coalition partner Citizens List, although Jansa could continue as Prime Minister in the short term. The government will also continue to lose support over the country’s deteriorating economic position, with austerity cuts prompting a public-sector rally in Ljubljana on 23 January.
On 27 January the UK Foreign Office issued a travel warning for Somaliland, citing evidence of an unspecified threat to Western targets. The FCO did not expand on the nature of the threat but referred to the continuing risk of kidnap for ransom and terrorism across the Somali region. The semi-autonomous enclave is a relatively stable part of Somalia that has not seen a major terrorist incident since 2008 but personnel may wish to review security measures.
Q4 growth estimates show that the economy contracted by 0.3 per cent and raises the possibility of a ‘triple dip’ recession. The data was worse than the predicted 0.1 per cent contraction and will increase pressure on Chancellor Osborne to moderate his austerity programme. The results may lead to a moderate increase in the UK borrowing cost and threatens the country’s AAA credit rating. Growth in 2012 flatlined overall, showing that any economic recovery will be very slow.
Source: AKE (United Kingdom)