Middle East and North Africa

U.S.-China tensions, a push by the Global South to build a parallel world order, new governments implementing controversial reforms and elections triggering social unrest will shape the fourth quarter.

Quarterly

Global Trends

After the U.S. election, U.S. President Joe Biden will likely expand support for Ukraine, sanction Venezuela and pressure Israel to end its war with Hamas. If Vice President Kamala <a href="/article/how-could-harris-presidency-impact-war-ukraine">Harris wins</a>, foreign policy changes would be minimal, but if former President Donald Trump is returned to office, U.S. support for Ukraine would fall and tariffs on China and other nations would increase. Ahead of the election, the Biden administration will refrain from taking foreign policy actions that could be unpopular domestically and/or raise energy prices, such as placing new sanctions on Venezuela that could cause oil prices to rise. Afterward, Biden will become more likely to threaten Israeli Prime Minister Benjamin Netanyahu and Israel&#39;s far right with sanctions and restrictions on aid in an effort to end the war in Gaza and reduce tensions in the Middle East. Biden will also be more likely to reimpose sanctions and end sanctions waivers for Venezuela&#39;s oil sector in response to the country&#39;s unfree elections. If Trump wins, Biden is likely to pursue last-ditch efforts to approve new Ukrainian aid &mdash; though this is unlikely to pass Congress &mdash; accelerate arms deliveries to Ukraine before Trump takes office, reduce restrictions on Ukrainian use of U.S.-made weapons on Russian soil and finalize agreements with NATO allies on ways to support Ukraine using frozen Russian assets, though Trump could reverse these policies once inaugurated. Even if Harris wins, Biden will renew those same pushes to support Ukraine. A Trump victory would also have global economic and political consequences, as he is likely to <a href="/article/what-second-trump-term-could-mean-global-trade-trumps-trade-priorities">implement new tariffs</a> on China and potentially other large U.S. trading partners starting in 2025. Finally, demonstrations and occasional political violence will mar the 2024 U.S. election cycle, particularly if Trump loses and rejects the result.&nbsp;

U.S. Election Frees up President Biden's Foreign Policy

The Federal Reserve and the European Central Bank will continue to ease monetary policy, which will improve the financing outlook for emerging and developing economies, even though the risk of sociopolitical unrest will remain elevated in financially struggling countries. Slowing inflation in the United States and Europe will allow both the Fed and the European Central Bank to continue cutting interest rates during the quarter. This will happen in the context of slowing but continued economic growth, and will benefit emerging and developing economies by providing them with easier access to international capital markets as investors start hunting for yields amid continued high emerging-market interest rates. The prospect of further dollar weakness will also support the financing outlook for distressed emerging and developing economies, as dollar weakness improves the balance sheet of countries that are net dollar debtors. Still, some countries, such as <a href="/article/bangladesh-improving-security-does-not-spell-stability">Bangladesh</a> and the Maldives, will face financing difficulties because of weak macroeconomic policies and overborrowing. Although developing economies will make progress on external debt restructuring, the sociopolitical challenges arising from the continued need for fiscal austerity, including subsidy cuts and tax increases, will ease more slowly against the backdrop of continued politically painful reform in countries with International Monetary Fund adjustment programs. Governments will remain broadly committed to IMF reforms, but will, if necessary, adjust their policies to disarm sociopolitical opposition to remain compliant with IMF agreements. The risk of sporadic unrest will remain high in IMF program countries regardless of whether they are undergoing debt restructuring (e.g., <a href="/article/despite-downside-risks-ghana-poised-progressive-economic-recovery">Ghana</a> and <a href="/article/whats-stake-sri-lanka-struggles-restructure-its-debt">Sri Lanka</a>), have largely successfully undergone debt restructuring, or did not have to restructure their debt (e.g., Egypt and <a href="/article/outlook-pakistan-imf-engagement">Pakistan</a>).&nbsp;

Lower U.S. and European Interest Rates Will Improve the Financing Outlook for Emerging and Selected Developing Economies

Climate negotiators at the <a href="/article/cop28-yields-first-ever-global-deal-transition-away-fossil-fuels">COP29 summit</a> will likely reach a deal on a new funding target for the developing world, but most funding provided by China and non-Western countries is likely to be on a voluntary basis. Negotiations on a deal to replace wealthy countries&#39; previous pledge of $100 billion in climate finance per year for the developing world after 2025 will be the most important item of discussion at this year&#39;s Nov. 11-22 climate summit in Baku, Azerbaijan. The United States and European Union are likely to push industrialized countries not currently included in the U.N. climate change framework&#39;s group of developed countries (including China and Saudi Arabia) to contribute, but these governments are unlikely to formally contribute and any cooperation is likely to be more ad hoc and voluntary. While negotiators are unlikely to leave the conference without a deal, significant disagreements over who should contribute will likely limit the deal&#39;s overall scope. Still, it will likely amount to at least $100 billion, even if individual countries&#39; expected contributions are not explicit. The U.S. election may also loom large over the talks. A Trump victory would almost certainly reduce U.S. leverage at the conference and make any commitments by the Biden administration&#39;s negotiators worthless, as Trump would likely trigger a U.S. exit from the Paris Agreement soon after taking office, and not honor any climate commitments made by the Biden administration.&nbsp;

Climate Finance Tops COP29 Agenda, but Global Divisions, U.S. Election Will Overshadow Conference

OPEC+ is likely to further delay unwinding some production cuts in December if oil prices remain around $75 per barrel or lower, as the oil market is likely to already be oversupplied &mdash; weighing heavily on oil producers&#39; export revenue. Sluggish economic growth in the West and China will constrain oil demand growth during the quarter. This will contribute to downward pressure on oil prices, particularly as non-OPEC oil producers like Guyana proceed with production increases and U.S. light tight oil production proves resilient to lower oil prices. If these bullish forces keep oil prices below $80 per barrel, Saudi Arabia and its OPEC+ allies are likely to delay their planned Dec. 1 unwinding of 2.2 million barrels per day in voluntary production cuts over the following 10 months. Even if prices are about $80 per barrel and OPEC+ moves forward with its plans, additional OPEC+ barrels on the market will cap oil prices nonetheless. Relatively low oil prices compared to 2022 and 2023 will negatively impact oil producers&#39; export revenue and their 2025 budget plans and even lead Gulf oil <a href="/article/evaluating-saudi-arabias-vision-2030-it-enters-home-stretch">producers like Saudi Arabia</a> to slash spending on large megaprojects that are a part of their long-term economic and social development strategies.&nbsp;

OPEC+'s Production Cut Unwind to Depend on Oil Prices 

A cease-fire in Gaza is unlikely, Hezbollah-Israel tensions will center on a war of attrition, and Israeli actions against Iran will trigger retaliation that falls short of a regional war. A cease-fire between Israel and Hamas will remain elusive because Israel will continue to demand that it retain some forces in the Gaza Strip to prevent a resurgence in the Hamas militant threat, something that Hamas will reject. In Lebanon, Israel and Hezbollah will continue to attack one another. Israel will aim to force Hezbollah into negotiations to withdraw from the border; Hezbollah will pressure Israel to abandon this demand while maintaining support for Hamas. Further overt and covert clashes between Israel and Iran are possible, sparked by steady Israeli escalation against targets of opportunity like Iranian military officials, <a href="/article/middle-east-descends-deeper-conflict-israels-killing-hezbollah-hamas-leaders">militant leaders under Iranian protection</a>, and infrastructure like factories and launch sites that support Iran&#39;s missile and drone threat to Israel. Iran may respond to Israeli provocations with limited drone and missile strikes on Israel that seek to maximize the political effects of responding but without triggering a regional conflict or pulling in the United States. In alternative scenarios, steady Israeli pressure on Hamas (including the assassination of additional leaders or continued U.S. support for the campaign in Gaza) could result in a cease-fire on Israel&#39;s terms. If there is a cease-fire, regional de-escalation from Hezbollah and Iran would likely follow. Meanwhile, though neither Israel nor Hezbollah wants another major war, the striking of politically sensitive targets, like high-level leaders or civilians, could push the two rapidly toward general war. Similarly, politically significant strikes on Israel and Iran would cause a rapid escalation.&nbsp; &nbsp;

In the Gaza War, Conflict Persists and Escalation Lurks

Iran&#39;s President Masoud Pezeshkian will implement some modest economic reforms, but progress on social issues is unlikely and neither are talks with the United States on sanctions relief. Any future relief will depend on the outcome of the U.S. presidential election, with a win by Vice President Kamala Harris increasing the likelihood of a new nuclear deal. Pezeshkian&#39;s new technocratic policy suggests his government will focus on economic policies during the quarter. Pezeshkian will likely release his first budget proposal, including his first fleshed-out economic reform plans, which will likely entail targeted budget cuts and potentially even a decline in the budget share for Iran&#39;s military &mdash; at least officially &mdash; though in actuality, funding may not decline. Significant social and political reforms will not occur this quarter as the makeup of <a href="/article/irans-pezeshkian-prioritizes-economic-platform-olive-branch-conservatives">Pezeshkian&#39;s new Cabinet</a> suggests a lack of desire to challenge the Iranian political system that backs the countries&#39; conservative social norms. Pezeshkian will approach the United States for nuclear negotiations, but the Biden administration is unlikely to seriously engage in those talks ahead of the election &mdash; or even after if the Gaza conflict is ongoing and/or if Trump is elected. A Harris victory in the U.S. election makes a deal with Iran and the United States more likely in the long term as the Harris government would likely pursue more diplomatic options with Iran, though any short-term movement is unlikely due to the ongoing Israel-Hamas conflict.&nbsp;

Iran's New President Starts Term With Focus on Economic Issues 

Egypt will likely carry out fiscal consolidation through budget cuts and face pressure to cut subsidies and raise taxes; in the meantime, despite pressure Turkey&#39;s Central Bank is unlikely to cut interest rates even as inflation decreases. In its fourth review of Egypt&#39;s financing program, the International Monetary Fund will pressure Cairo to <a href="/article/how-will-gaza-war-impact-egypt-jordan-and-lebanons-economies">improve its fiscal consolidation</a>. As a result, Cairo&#39;s ministries will likely cut budgets &mdash; especially for public investment &mdash; ahead of the Dec. 30 deadline to curb government spending. Cairo may also make additional subsidy cuts and gradually increase taxes to boost government revenue; such measures portend a low, but growing, risk of domestic unrest due to increased costs of living. Egypt&#39;s fiscal consolidation efforts will likely boost investor confidence in the long term and result in the International Monetary Fund disbursing additional tranches of the loan. Meanwhile, Turkish businesses in growing sectors will likely pressure Turkey&#39;s Central Bank to cut interest rates following a likely U.S. Federal Reserve cut after months of decreased inflation rates in Turkey and slow Turkish economic growth. But Turkey&#39;s Central Bank is unlikely to do so, as inflation rates remain relatively high, albeit decreasing. Turkish President Recep Tayyip Erdogan, who previously opposed high interest rates, backed Turkey&#39;s Sept. 5 medium-term program, a road map outlining Turkey&#39;s three-year macroeconomic policy that prioritized combating inflation and boosting growth in key sectors including agriculture, industry and tourism. By maintaining its <a href="/article/will-political-imperatives-reverse-turkeys-tighter-monetary-policy">tight monetary policy</a>, Turkey&#39;s inflation rate will likely further decrease by the end of the year but also result in slower economic growth, especially in the manufacturing and automotive sectors, due to the high interest rates that businesses and consumers are likely to continue to face.

Pressure Mounts for Economic Reforms in Egypt and Turkey

Saudi Arabia will prepare major cuts to its Vision 2030 economic program as it tries to develop comparative economic advantages against its neighbors. As Saudi Arabia gauges <a href="/article/evaluating-saudi-arabias-vision-2030-it-enters-home-stretch">the way forward</a> for competitiveness, Riyadh will debate which megaprojects associated with Vision 2030, like theme parks and the scale of Neom in the northwest, to cut. Although Saudi Arabia may not announce such cuts with much fanfare, the ripple effect of reduced ambitions will help define investor and international confidence in the kingdom&#39;s economic trajectory in the final years of Vision 2030 because it will assuage lingering investor doubt that the country&#39;s economic diversification will be sustainable. During the quarter, Riyadh will also reinforce diplomatic policies with Iran and the Houthis designed to assure its security as well by trying to keep itself out of the regional security crisis produced by the Gaza War, including delaying Saudi-Israeli normalization further, responding to the changeover in administration in the United States to a potentially more anti-Iran White House if former President Donald Trump wins in November and maintaining positive diplomatic momentum towards a permanent cease-fire with the Houthis in Yemen despite continued U.S.-Houthi conflict.&nbsp; &nbsp;

In Saudi Arabia, Vision 2030 Faces Internal Scrutiny and External Challenges 

Europe

The new European Commission&#39;s work program will prioritize new defense and green industrial strategies, while trade tensions with China will escalate as EU tariffs on Chinese electric vehicles enter force. The <a href="/article/despite-far-right-gains-centrists-retain-control-eu-parliament">new European Commission</a> will take office in November or December, and will for the first time include a commissioner for defense and security. That official will be tasked with overseeing the implementation of the EU defense industrial strategy and program unveiled in March aimed at developing the bloc&#39;s military-industrial base by incentivizing and coordinating joint development, production and procurement. This new portfolio will likely be largely symbolic, at least at the beginning, with limited powers and financial resources. The European Commission will also publish its work program for next year, which will likely emphasize measures to enhance the bloc&#39;s competitiveness in <a href="/article/what-make-eus-new-green-industrial-strategy">clean technology</a> and <a href="/article/goals-and-limits-eus-new-defense-industrial-strategy">defense industrial production</a>. The European Parliament will also pick up unfinished legislative work from the previous term, and will seek to approve a number of minor matters related to agriculture, health care, transport and the environment. But agreements on big or controversial packages, such as reforms to the bloc&#39;s pharmaceutical legislation, are unlikely during the quarter. EU tariffs on the <a href="/article/chinese-electric-vehicles-prepare-hit-great-wall-western-tariffs">imports of Chinese electric vehicles</a> will formally enter force for the next five years Oct. 31, unless the two sides manage to achieve a settled solution to the dispute by then, as member states opposing the move are unlikely to reach the qualified majority needed to block them. This will likely be followed by some Chinese retaliation, possibly involving tariffs on imports of EU agricultural products or even high-tech and high-value goods, like large-engine cars. &nbsp;

The New Commission Takes Over as EU-China Trade Tensions Heat Up

The French government will struggle to pass a budget for 2025 and may have to use constitutional powers to bypass Parliament, which would avoid a financial crisis but would also increase the risk of significant social unrest. The new <a href="/article/frances-new-prime-minister-will-struggle-pass-laws-and-avoid-financial-woes">French government&#39;s main goals</a> will be to produce a medium-term fiscal adjustment plan to present to the European Commission and then pass a budget for next year in the highly <a href="/article/france-keeps-far-right-bay-hung-parliament-still-raises-political-risks">divided hung parliament</a> that emerged from early parliamentary elections in July. If the government manages to strike a compromise between moderate forces in Parliament, the result will be a budget that achieves very limited fiscal consolidation. While this would lead to higher premiums on French assets, it would still not trigger a financial crisis, as markets would at least welcome clarity over the country&#39;s fiscal policy direction. But deep divisions in Parliament and limited fiscal space make this scenario unlikely. The government is also unlikely to use special constitutional provisions to bypass a vote in Parliament, as this would trigger a no confidence vote that would likely topple the government. Given the foregoing, the most plausible scenario is for the government to fail to pass a budget, and then seek parliamentary approval to at least continue collecting taxes and issue decrees for essential public spending on a month-to-month basis until a new budget is passed. Should Parliament block this process as well, Macron would resort to special presidential powers to roll over this year&#39;s budget without a vote. While this would prevent a government shutdown and an eventual financial crisis, it would likely trigger intense social unrest in France.

France Faces Budget Deadlock Amid Divided Parliament and Financial Pressures

The United Kingdom will begin talks with the European Union to reset relations, while a tight fiscal situation will force London to implement targeted tax hikes and other saving measures. The <a href="/article/after-14-years-what-would-uk-labour-government-look">British government</a> will intensify its diplomatic outreach during the quarter, formally relaunching discussions with Brussels to improve post-Brexit ties while seeking to conclude a bilateral defense agreement with Germany that could offer a blueprint for a broader EU-wide security pact next year. The United Kingdom will also seek to finalize trade deals with partners outside Europe, with <a href="/article/elections-behind-them-uk-and-india-resume-trade-talks">negotiations expected to accelerate</a> with India and Gulf Cooperation Council countries during the quarter while the United Kingdom will officially enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. In October, the government will present its first budget, which is likely to feature tax hikes and spending cuts amid a tighter than expected fiscal situation inherited from the previous government and a Labour pledge to maintain fiscal discipline. Chancellor Rachel Reeves has promised not to increase income taxes, the value-added tax or national insurance, which means that hikes are likely on financial transactions, capital gains and inheritance. So are planned measures such as an increased windfall tax on energy companies, the end of tax credits for private schools and a complete phase-out of the non-dom &mdash; or people living in the United Kingdom who claim permanent residence elsewhere &mdash; tax regime.&nbsp;

Labour to Begin EU Ties Reset While Budget Hurdles Loom

The Polish government will increase public spending ahead of presidential elections in 2025, while tense budget negotiations and contentious economic reforms will increase government infighting in Germany and Italy. The Polish government will approve a budget for 2025 that will include a substantial increase in defense, health care and welfare spending. While this will allow the ruling coalition to meet electoral pledges ahead of <a href="/article/political-polarization-fuels-uncertainty-ahead-polands-2025-presidential-election">next year&#39;s presidential elections</a>, it will also result in the country&#39;s highest-ever deficit, forcing Warsaw to implement substantial fiscal consolidation measures in the next budget to comply with EU fiscal rules. Meanwhile, Poland could see more Ukrainian refugees escaping harsh winter conditions amid a deteriorated energy infrastructure due to Russian attacks. This could lead to domestic sociopolitical tensions and challenge Prime Minister Donald Tusk&#39;s commitment to provide humanitarian relief to Ukraine. In Germany, the government will seek parliamentary approval for a 2025 budget that includes a 12 billion euro (about $13 billion) financing gap and for a costly pension reform anchoring the minimum pension level to the average wage until 2039, both of which could face last-minute resistance in parliament and cause <a href="/article/what-poor-performance-eu-elections-means-germanys-coalition-government">renewed tensions within the ruling coalition</a>. In Italy, the government will implement painful saving measures as part of a <a href="/article/look-eus-revised-fiscal-rules">fiscal adjustment plan</a> to reduce its structural deficit, including spending cuts and adjustments to the retirement age for some categories. These measures could lead to disagreements within the coalition government, especially around regional elections in Liguria and Emilia-Romagna. Neither the German nor the Italian ruling coalitions are ultimately likely to collapse as a result of tense budget debates during the quarter.

Poland to Boost Spending as Germany, Italy Face Tense Budget Battles

Eurasia

Russia and Ukraine will slow offensive operations as winter sets in, leading to intensified deep strikes, with Russia targeting Ukraine&#39;s energy infrastructure and the United States likely expanding Ukraine&#39;s strike range. Russian forces will continue offensive operations during the first part of the quarter toward Pokrovsk and Toretsk in Donbas, and <a href="/article/russias-new-front-kharkiv-raises-stakes-ukraine-and-west">improve their positions in the Kharkiv region</a> and around Ukraine&#39;s incursion into the Kursk region, but no major Russian breakthrough will occur, as Ukrainian forces will repel most of these attacks. In the second half of the quarter the pace of Russia&#39;s and Ukraine&#39;s operations will slow as colder weather sets in, for which each side will compensate by expanding their <a href="/article/bracing-protracted-war-ukraine-ukraines-challenge-2024-and-beyond">deep strike campaign</a> inside the other. Russia will focus on hitting Ukraine&#39;s remaining electricity generation and transmission capacity, ensuring that Ukraine experiences significant hardships during the winter and prompting more Ukrainians to flee their country. Ukrainian forces in Kursk will entrench themselves and attempt to draw disproportionate Russian forces to the area, but this will not lead to serious cease-fire negotiations. While the events in Kursk have exposed Russia&#39;s troop shortages, the Kremlin is unlikely to implement a full mobilization during the quarter to avoid negative political and economic effects. The United States will likely increase Ukraine&#39;s effective strike range through the supply of Joint Air-to-Surface Standoff Missiles and a relaxation of range restrictions on the use of Army Tactical Missile Systems inside Russia, a move Russia will respond to through escalation, for example by increasing the intensity of its ongoing sabotage and interference campaign against the West. No matter how the U.S. election turns out, the Biden administration will seek to bolster Ukraine in its final weeks, pushing for another supplemental support package. Ukrainian forces will become desperate and could <a href="/article/how-could-second-trump-presidency-impact-war-ukraine">violate Western restrictions</a> if Trump wins, while if Harris wins, Kyiv&#39;s forces will become more cautious.&nbsp;

Russia and Ukraine Dig in and Brace for U.S. Election Results

While Georgia will likely become more authoritarian and isolated from the West as its government cracks down on dissent, Moldova will reaffirm its intention to move closer to the European Union. Georgian Dream and its allies will likely receive enough seats in the Oct. 26 parliamentary election to form a government, at least according to the official results, while <a href="/article/deep-divisions-set-tone-georgias-geopolitical-future">opposition parties</a> will take to the streets charging fraud. The government and security forces will claim that the opposition wants to destabilize the country, which they will use to justify heavy crackdowns that will <a href="/article/georgia-set-adopt-its-controversial-foreign-agents-bill-what-now">eventually suppress the protests</a> and force some Georgians into exile. In the future, Georgian Dream may use the same pretext to ban opposition parties. This is unlikely to happen during the quarter, as Tbilisi will seek to mitigate foreign pressure and sanctions on Georgia, believing a Trump victory would allow it to reset relations with the West on its terms. A Harris victory, by contrast, could embolden U.S. and European sanctions on Georgia, prompting Georgian Dream to seek economic support from China and Russia. In a less likely scenario, opposition parties win enough seats in Parliament to prevent Georgian Dream from forming a government, threatening to unseat the government and emboldening large-scale protests that could continue for an extended period and paralyze the capital. In Moldova, incumbent President Maya Sandu will likely win reelection, even if a second-round vote may be needed. Her victory will likely result in small-scale protests by increasingly desperate <a href="/article/moldova-two-key-votes-portend-more-pro-russian-political-agitation">pro-Russian political forces</a>, which will be less capable of obstructing Moldova&#39;s EU integration in the years ahead, most notably ahead of 2025 parliamentary elections.

Georgia and Moldova Hold Decisive Elections and Brace for Unrest

Azerbaijan will use the COP29 summit to bolster its image and attract foreign investment, constraining its appetite for escalation against Armenia but also stalling peace talks. Baku will host the COP29 climate summit Nov. 11-22, the largest international event Azerbaijan has hosted since its victory over Armenia in the 2020 Nagorno-Karabakh War. Baku will use the event to attract foreign investment, most notably in green industries, claiming the restoration of its internationally recognized borders makes the country a safer place to do business. Baku will seek to greenwash its dependence on oil and gas production, which accounts for 90% of the country&#39;s exports and around a third of its gross domestic product, and to deflect criticism of its questionable human rights record and lack of political pluralism. China and the United States will compete for influence with Baku through promises of new investments. The Oct. 23-24 BRICS summit in Russia will also help Azerbaijan elevate its international profile. Baku&#39;s desire to present a peaceful image to the international community will reduce its interest in any military escalation against Yerevan during the quarter, meaning the risk of violent clashes will fall. But <a href="/article/armenia-azerbaijan-negotiations-head-right-direction-have-long-way-go">peace talks will remain stalled</a>, as Baku points to its demands for constitutional changes in Armenia, the unfinished bilateral border demarcation process and the lack of agreement on regional transit corridors.&nbsp;

Baku Hosts COP29 as Peace Talks With Armenia Stall

A referendum enabling nuclear power in Kazakhstan will increase public discussion about the country&#39;s infrastructure challenges and geopolitical trajectory. On Oct. 6, Kazakhstan will hold a referendum on the construction of a nuclear power plant. The national referendum, only the fourth in the country&#39;s history, will likely pass by a significant margin amid dissatisfaction with continued electricity shortages, reliance on imports to meet demand and thermal power plants currently accounting for more than two-thirds of Kazakhstan&#39;s electricity generation, causing pollution and obstructing the country&#39;s green development goals. The referendum will pave the way for <a href="/article/will-economic-liberalization-be-enough-attract-foreign-investment-kazakhstan">subsequent public discussions</a> about which foreign country&#39;s nuclear company will be selected to construct the facility, though a final announcement is unlikely during the quarter. Russia&#39;s Rosatom is favored to win the tender because <a href="/article/kazakhstans-diversification-push-wont-spur-russian-retaliation-now">Astana is wary of upsetting Moscow</a>, which could seek to respond with economic coercion should it choose a non-Russian company, endangering Kazakhstan&#39;s economic and political stability. Even so, Chinese and South Korean companies remain contenders as part of Astana&#39;s geopolitical balancing efforts. Selecting either one would prompt extra steps by Astana to reassure Moscow of continued close political and economic ties, including as a conduit for the trade of sanctioned goods to Russia.

Kazakhstan Voters Approve Nuclear Power

Asia-Pacific

Japan&#39;s new prime minister will strengthen military ties and economic security cooperation with the West, particularly with the United States and South Korea, but could trigger domestic economic shifts (e.g., on corporate and consumer support) ahead of general elections. Following Prime Minister Fumio Kishida&#39;s <a href="/article/japan-kishidas-resignation-will-bring-new-face-same-old-ldp">August resignation announcement</a> and the Sept. 27 leadership election for the ruling Liberal Democratic Party, Japan&#39;s new premier will likely continue Kishida&#39;s defense policies, especially military strengthening (e.g., an expanded defense budget and the pursuit of constitutional reform) and <a href="/article/japan-us-relationship-serves-model-indo-pacific-security-bad-omen-china">closer cooperation with U.S.</a> and South Korean forces, while backing Western supply chain resilience efforts and restrictions on China&#39;s semiconductor sector. Economic views vary among Kishida&#39;s would-be successors (particularly on corporate taxes, consumer subsidies and wage issues), which means that this is the area most subject to change depending on the winner. Still, all agree the LDP needs to bolster public support ahead of general elections (not due until October 2025), which means that measures to support consumers are likely. The new leader could <a href="/article/japan-kishidas-cabinet-reshuffle-intended-facilitate-snap-election">call a snap election</a>, in which case ballots would likely be cast in late October or early November 2024. But the LDP&#39;s low levels of public support, undergirded by economic concerns that take time to address postelection, make a snap election somewhat unlikely. In the event of an early general election, this could open the door to an opposition coalition that would scale back the LDP&#39;s expansion of regional military ties and its pursuit of pro-market economic, and conservative social, policies. &nbsp;

Japan's New Leader Stays the Course

The United States could sanction Chinese financial institutions over trade with Russia, risking Chinese economic retaliation, while U.S. congressional leaders could visit Taiwan amid U.S. elections, prompting Chinese military drills in key waterways. Prior to stepping down in January 2025, U.S. President Joe Biden could <a href="/article/tightened-western-tech-export-controls-china-signal-more-come">sanction several Chinese financial institutions</a> for facilitating <a href="/article/what-expect-during-putins-trip-china">Russia&#39;s trade in dual-use goods</a>. These sanctions risk proportional Chinese retaliation against some U.S. corporations either through legal means like the Anti-Foreign Sanctions Law or Unreliable Entity List or more informal means, like red tape and internal policy guidance designed to edge these companies out of the Chinese market. Meanwhile, there is a modest chance that U.S. congressional leaders will visit Taiwan ahead of November House elections to bolster their anti-China credentials, which would risk a new round of <a href="/article/chinas-latest-military-drills-around-taiwan-set-tone-cross-strait-relations-under-lai">Chinese military drills</a> around Taiwan. Like their predecessors in August 2022, April 2023 and May 2024, these drills would raise supply chain and shipping continuity concerns in the heavily trafficked Luzon, Miyako and Taiwan straits, though war remains highly unlikely. Domestically, China will <a href="/article/chinas-third-plenum-will-cater-xis-statist-vision-economic-reform">wield modest, targeted spending</a> &mdash; for real estate, infrastructure and consumption incentives &mdash; in an attempt to spur economic growth. This will likely include more sovereign treasury bonds and front-loaded special purpose bonds issuances for 2025, but these measures will be minimally stimulative and keep <a href="/article/gauging-risk-systemic-financial-crisis-china">consumer and business confidence low</a>.&nbsp;

U.S.-China Tensions Rise Alongside Russia, Taiwan Issues

The Sabina Shoal contest and more frequent overflights create fertile ground for accidents, with fatalities a risk to watch for as a potential escalation trigger. The Philippines alleges China is building an artificial island on Sabina Shoal, which it aims to prevent. Consequently, the Philippines stationed an advanced vessel to monitor Sabina Shoal for land reclamation activity, which requires routine resupply. This provides a consistent trigger for future <a href="/article/chinese-philippine-collisions-bring-attention-back-south-china-sea">South China Sea confrontations</a> between the two countries. These resupply missions are emerging as the <a href="/article/revamped-us-philippine-alliance-starts-come-fruition">latest point of tension</a> and are set to be the site for clashes in the coming months in addition to the existing hotspots of the Second Thomas and Scarborough shoals. More frequent and routine Philippine air reconnaissance missions simultaneously heighten the risk of the dispute intensifying in the air. The quarter could also see additional involvement from the People&#39;s Liberation Army Navy, which would mark an escalation.&nbsp;

Sabina Shoal Is the Newest South China Sea Hotspot

Indonesian President Prabowo Subianto&#39;s inauguration will come amid an intergovernmental power struggle that stokes protest risk as well as the possibility of a constitutional crisis. Subianto&#39;s <a href="/article/previewing-indonesias-presidential-election">Oct. 20 inauguration</a> will largely result in policy continuity between his administration and that of outgoing President Joko &quot;Jokowi&quot; Widodo. The Jokowi-Subianto alliance&#39;s efforts to consolidate power &mdash; especially changing laws to place both individuals&#39; family members in influential positions &mdash; spurred political clashes between the <a href="/article/jokowis-dynastic-ambitions-risk-plunging-indonesia-crisis">Constitutional Court and legislature</a> and sparked violent protests in August, which caused relevant legal changes to be suspended. Further efforts by the Jokowi-Subianto alliance to undermine democratic institutions and norms will likely cause additional protests in Jakarta and other major cities, particularly following protesters&#39; successes in August. These risks will increase after the Oct. 1 initiation of a new parliamentary term (as the legislature will be even more stacked with Jokowi-Subianto allies) and Subianto&#39;s Oct. 20 inauguration. The political friction poses a low-likelihood, high-impact possibility of a constitutional crisis, which, depending on the length and severity, could deter foreign investment, undermine <a href="/article/indonesia-gambles-refined-nickel-amid-global-energy-transition">trade and industrial policy</a>, create an opportunity for China to increase its influence in the country and dent Indonesia&#39;s status as the de facto leader of the Association of Southeast Asian Nations.

Indonesia Inaugurates a New President Amid Constitutional Controversy 

Vietnam&#39;s political environment is set to stabilize, reducing political and business uncertainty but also heightening the risks of surveillance and regulatory scrutiny of foreign businesses. During the first three quarters of the year, <a href="/article/another-abrupt-leadership-change-sows-doubt-about-vietnams-political-stability">purges of high-profile leaders</a>, a political shake-up and the <a href="/article/what-expect-following-death-vietnams-top-leader">death of the top leader</a> have created significant political volatility in Vietnam. New Vietnamese Communist Party General Secretary To Lam&#39;s successful <a href="/article/enforcer-vietnams-anti-corruption-campaign-has-been-appointed-president">consolidation of power</a> has now likely put an end to Vietnam&#39;s uncharacteristically rapid turnover in high-profile positions for the quarter, with instability unlikely to resurface until the next leadership turnover in 2026. Though punitive actions on public officials related to the anti-corruption campaign are winding down at the elite level, they are still strong at local levels, which will affect local governance, causing local officials to hesitate in issuing business licenses and facilitating other local business deals for fear of committing an infraction. At the same time, Lam&#39;s suspicion of foreign investment as a source of undesirable foreign influence risks intensified surveillance and regulatory scrutiny of business dealings that involve sensitive data or industries. Though Lam could change Vietnam&#39;s high-level economic trajectory after the current term expires in 2026 and a new agenda is drawn up under his purview, he is unlikely significantly to alter Vietnam&#39;s high-level economic policy course, namely, its efforts to move up the manufacturing value chain for exports and attract investment in emerging technologies like semiconductors.

Vietnam's Political Situation Stabilizes

Americas

Mexican President Claudia Sheinbaum&#39;s first three months in office will mark the beginning of a new regulatory and constitutional framework that will negatively impact the business environment. The new president will take office just as Congress (where the ruling party holds more than two-thirds of seats in the Chamber of Deputies and is short of a supermajority by just one vote in the Senate) is approving a series of sweeping reforms affecting everything from judicial and electoral systems to oversight bodies and sector-specific regulation &mdash; which will particularly impact the agricultural, energy and mining sectors. The ruling <a href="/article/morena-sweeps-mexicos-general-election-portending-policy-continuity-and-possible">Morena coalition&#39;s landslide victory</a> in the June 2 presidential and legislative elections will sustain Sheinbaum&#39;s high approval ratings and enable her to push for broad continuity with the policies of her predecessor, Andres Manuel Lopez Obrador. The opposition&#39;s internal struggles will limit any pushback, although isolated <a href="/article/what-judicial-reform-means-mexicos-business-environment">protests against judicial reform</a> are likely. Sheinbaum will also start to unveil her own plans for her six-year term, which will likely include expansions of gig workers&#39; rights and an increased focus on energy transition initiatives by the end of the year. While markets have priced in most of the negative impacts that the <a href="/article/assessing-mexicos-post-election-economic-outlook">government&#39;s interventionist policies</a> will have on the economy, announcements of new reforms or interventionist measures by Sheinbaum or her ministers or prolonged legal battles over the reforms will likely fuel additional uncertainty and financial volatility.&nbsp; &nbsp;

Businesses in Mexico Brace for a New Era Under Morena's Supermajority Government

Brazil will reach multiple investment agreements with China, while Brasilia will see modest progress in its push for the G20 to fight global economic inequality. Brazilian President Luiz Inacio Lula da Silva and Chinese President Xi Jinping will use a meeting in Brazil in November to discuss the prospects of Brasilia joining the Belt and Road Initiative. Even if no formal announcement materializes during the quarter, the two leaders will likely announce further bilateral cooperation, such as in <a href="/article/tariffs-us-soy-will-strengthen-brazils-hand-chinese-market">Chinese investments in Brazil&#39;s agriculture</a>, infrastructure, renewable energy and electric vehicle sectors. Da Silva will meanwhile use the G20 summit that Brazil will host in November to propose a global alliance to fight inequality. Such an effort would likely rely on developed economies pledging resources to a common fund, a process similar to environmental protection commitments of recent years, with the first steps toward its creation to be announced during the summit. Concrete developments regarding the multilateral introduction of a global tax on billionaires, however, are unlikely to materialize. After October&#39;s local elections &mdash; where parties with loose ideological identity but a large representation in Congress will win most municipal races and maintain the status quo &mdash; legislators will refocus on policymaking and <a href="/article/brazil-lulas-obstacles-passing-economic-policies-continue-mount">prioritize tax-related matters</a>, including the reduction of mandatory social spending increases, measures to offset the fiscal impact of corporate tax subsidies and the 2025 budget. Political instability will likely remain limited, though new developments related to lawsuits against and investigations into former right-wing <a href="/article/brazil-gives-bolsonaro-boot-what-now">President Jair Bolsonaro</a> could spark demonstrations.&nbsp;

Brazil Draws Closer to China, but G20 Summit Unlikely to Result in Significant Action

Argentina&#39;s macroeconomic conditions will further stabilize and although high poverty and unemployment will continue to expose the country to risks of unrest, this probably will not derail the government&#39;s economic plans. The government&#39;s <a href="/article/argentina-braces-painful-economic-measures-under-its-new-president">harsh austerity measures</a> are likely to continue delivering positive fiscal results while monthly inflation will continue to decline. Still, price levels are likely to remain high enough such that the government is unable to match the official and the unofficial exchange rates. That coupled with significant debt maturities and negative net reserves mean that currency controls will remain in place in the quarter. President Javier Milei will <a href="/article/argentina-has-elected-libertarian-president-what-now">continue seeking to control inflation</a> and deregulate the economy while rebuilding dollar reserves to lift capital controls and attract investment, and Argentina will continue to take steps toward economic normalization; a timid economic rebound is likely to begin before the end of the year. Should socioeconomic conditions erode further or inflation start rising again, popular support for the administration will wane and sporadic demonstrations and strikes could fuel political instability. Still, protests are unlikely to escalate in to widespread unrest and destabilize the government by the end of the year; this would likely require a confirmed inflationary trend for several months. &nbsp;

Argentina Remains on Track to Normalize the Economy Amid Competing Priorities

Political instability will intensify in Venezuela and Bolivia amid growing domestic political disputes with the potential to become crises, while a municipal and regional election in Chile is unlikely to lead to political instability or disrupt the business environment. The Venezuelan opposition will call for new demonstrations domestically and abroad in the fourth quarter ahead of Jan. 10, 2025, the day a transition of power is scheduled and when they claim Edmundo Gonzalez should replace <a href="/article/what-maduro-clinging-power-means-venezuela">Nicolas Maduro as president</a>. Amid growing pressure, including probable stricter U.S. sanctions on the Venezuelan oil sector from November onward, Maduro will crack down harder on the opposition. The potential killing of demonstrators or the arrest of prominent opposition leaders, especially Maria Corina Machado, will remain triggers for violence. But diplomatic pressure and street protests are unlikely to <a href="/article/previewing-venezuelas-presidential-election">bring down the government</a>. Bolivia meanwhile will continue to face shortages of fuel, dollars and medicine in the fourth quarter and is likely to experience a growing number of protests in the lead-up to judicial elections Dec. 1, increasing political instability. Former President Evo Morales is likely to leverage his capacity to mobilize supporters to undermine President Luis Arce as <a href="/article/rift-helm-bolivias-government-paves-way-more-instability">both seek the presidency</a> in November 2025. In Chile, <a href="/article/forecasting-latin-americas-next-crime-hotspot-after-ecuador">public security</a> will be the key topic of electoral discussions, with right-wing candidates using the rise in homicides and organized crime as an argument to push populist, heavy-handed proposals. Although all left-wing parties that support the government will run as an alliance in the municipal executive elections, they will likely not win a majority of mayoralties while right-wing and far-right candidates will leverage popular discontent to win most city halls and position their parties as alternatives in the presidential election. &nbsp;

Instability to Rise in Venezuela and Bolivia While Elections in Chile Focus on Security 

South Asia

Assembly elections in Jammu and Kashmir will help gauge the sustainability of the Indian government&#39;s decision to revoke the region&#39;s special autonomous status; a win for the governing Bharatiya Janata Party could increase communal tensions there and lead to renewed frictions with Pakistan. On Sept. 25 and Oct. 1, Jammu and Kashmir &mdash; a region with strong separatist sentiment &mdash; will hold the second and third phases of its <a href="/article/fresh-elections-could-see-risks-reemerge-jammu-and-kashmir">legislative elections</a>, respectively. This marks the first election since the Indian government revoked the region&#39;s special autonomous status in 2019 and turned it into a union territory governed directly by the federal government. The BJP and its regional allies are campaigning on sustaining this decision, citing concerns over radicalization and terrorism and advocating for the continued integration of the region with the rest of India. Opposition parties want to restore the region&#39;s statehood and autonomy, which they argue is crucial for protecting local identity and rights. A BJP victory could facilitate central government efforts to encourage migration into Jammu and Kashmir from outside the region and remove legal restrictions that currently ban people from outside Jammu and Kashmir from owning property there, potentially leading to social unrest. If this happens, the central government is likely to deploy troops to the region to prevent large-scale protests. A win for the opposition would increase pressure on the federal government to negotiate autonomy. The broader region has also historically been a flashpoint between India and Pakistan, which have overlapping territorial claims there. A victory for the BJP or an aligned party could increase diplomatic tensions with Pakistan, which would be unhappy to see New Delhi exert greater control over the disputed territory. A win for the opposition or local Kashmiri parties might also lead to bilateral tensions, as Pakistan could use it to renew pressure on India to enter negotiations about the region&#39;s future.

India's Jammu and Kashmir to Hold Key Elections

India&#39;s government will likely delay controversial land and labor reforms but will likely advance the smart cities program and Medical Devices scheme in an effort to boost manufacturing and economic growth. In the wake of the <a href="/article/bjps-policy-prospects-following-indias-general-election">BJP&#39;s weak electoral showing</a> and the opposition&#39;s greater presence in the Lower House, the government will likely face constraints in implementing contentious economic policies like land and labor reform, which simplify land acquisition, reduce delays and legal issues, provide more flexibility in workforce management, and diminish labor unions&#39; power. In the meantime, the recently launched smart cities program, which includes 12 new industrial smart city projects approved under the National Industrial Corridor Development Programme, will be developed this quarter. These projects aim to enhance India&#39;s manufacturing ecosystem, attract foreign investment and create jobs, contributing to the country&#39;s economic growth and global competitiveness. Additionally, the Medical Device scheme under Prime Minister Narendra Modi&#39;s &quot;Make in India&quot; initiative, designed to boost domestic medical device manufacturing, will likely be unveiled this quarter. It will provide incentives, infrastructure support, and research and development funding to enhance production and competitiveness. &nbsp;

India Likely to Delay Economic Reforms, Focus on Boosting 'Make in India'

Bangladesh&#39;s government will likely delay holding elections to prioritize economic reforms, increasing the risk of political volatility and social unrest. <a href="/article/bangladeshi-militarys-expanded-role-politics-after-sheikh-hasina">Bangladesh&#39;s interim government</a> will focus on reforms in administration, the judiciary and law enforcement, a process that will take months and will likely result in Dhaka delaying elections beyond the constitutionally mandated 90 days. During the quarter, the government will likely establish a police commission for law enforcement reform, form a bank commission for financial sector changes, investigate recent violence and protests, and implement accountability procedures for extrajudicial killings. Amid high inflation, declining remittances and political unrest affecting garment exports, the government will release a white paper outlining specific policy measures and adjustments needed to address these challenges effectively. The government will also likely revise the 2024-25 national budget to address macroeconomic instability, inflation and foreign exchange shortages. In October, an International Monetary Fund mission will review loan conditions ahead of a possible fourth tranche in December, where the government will seek an additional $3 billion despite having to meet reserve requirements set by the IMF. This would increase the total IMF loan to $7.7 billion. Meanwhile, there is a high risk of protests driven by wage issues in the ready-made garment sector, economic instability and perceptions of one-sided reforms that exclude the <a href="/article/bangladesh-hasinas-resignation-portends-greater-political-and-economic-uncertainty">previously ruling Awami League</a>, which may inflame unrest.

Bangladesh Likely to Delay Elections to Prioritize Reform

Sri Lanka&#39;s new president will likely face increased social unrest from implementing IMF-mandated austerity measures and long-unaddressed Tamil grievances, all while balancing relations between India and China. Following the <a href="/article/2024-elections-sri-lanka">Sept. 21 presidential election</a>, Sri Lanka&#39;s new president will face the challenge of implementing <a href="/article/whats-next-sri-lanka-after-its-failed-imf-review">IMF-mandated austerity measures</a> and reforms to restore fiscal and debt sustainability. The changes will include broadening the tax base and enforcing rigorous fiscal consolidation. These measures are likely to provoke social unrest due to their impact on living standards and could reduce the government&#39;s popularity, though the government will likely remain undeterred. Additionally, if the president does not implement the 13th Amendment of the Constitution, which grants greater autonomy to the Northern and Eastern provinces and addresses Tamil grievances, this could heighten regional tensions, leading to potential unrest and renewed calls for greater autonomy or secession. The Sri Lanka Podujana Peramuna party&#39;s dominance in parliament could meanwhile force the government to compromise to pass legislation. In the foreign policy sphere, Sri Lanka will maintain its geopolitical strategy of balancing relations between India and China through free trade agreements currently under negotiation and collaboration on infrastructure and regional security projects.

Sri Lanka's New President Faces Austerity Measures, Ethnic Tensions and Geopolitical Balancing

In Pakistan, the government will likely proceed with IMF-recommended reforms likely to provoke political pushback and protests, while internet disruptions will harm business operations. Pakistan&#39;s government will adhere to <a href="/article/challenges-facing-pakistans-new-government">IMF-recommended reforms</a>, though potential divisions within the governing coalition might slow progress, particularly in energy sector reforms. These issues are unlikely to disrupt the IMF program in the fourth quarter, potentially paving the way for the Executive Board to approve <a href="/article/outlook-pakistan-imf-engagement">Pakistan&#39;s new IMF program</a>. To align with the IMF program, the government will likely work to privatize nonstrategic state-owned enterprises and ministries, and raise taxes in the retail, export and agriculture sectors. These contentious measures, particularly energy and agricultural taxes, will likely provoke significant political backlash and social unrest, as powerful landowners in leading political parties have lobbied to keep agricultural taxes low, complicating government efforts to implement these changes. As long as the coalition remains in agreement, which is likely this quarter, their simple majority in the National Assembly means it can probably pass the controversial legislation. Meanwhile, internet disruptions caused by a faulty undersea cable will continue into October; digital rights activists believe the real cause of the outage is the government&#39;s installation of firewall technology to filter content. If confirmed, this could signal a move toward greater digital censorship, harming business operations, restricting freedom of expression, limiting access to information and undermining investor confidence in Pakistan&#39;s digital economy. &nbsp;

Pakistan to Implement Further Austerity Measures as It Awaits IMF Executive Approval

Sub-Saharan Africa

Ethiopia&#39;s decision to free-float the birr will likely drive up prices of basic commodities, increase social unrest, and heighten domestic security risks. Prime Minister Abiy Ahmed will meanwhile likely remain committed to a maritime port deal with Somaliland, potentially leading to clashes with Somalia. Inflation in Ethiopia is likely to rise over the quarter following the birr&#39;s free floating July 29 as part of the <a href="/article/ethiopias-imf-deal-presages-long-term-gains-risks-fueling-security-challenges">country&#39;s IMF support package</a>, which has resulted in the currency steeply depreciating against the dollar. While the government has begun rolling out a support program to preempt a surge in socioeconomic grievances, this is unlikely to fully mitigate the rise in the cost of living for many households, which could trigger strikes and protests. Rising socioeconomic grievances could also fuel recruiting by ethnic militias, such as <a href="/article/unrest-amhara-threatens-destabilize-northern-ethiopias-tenuous-peace">Fano in the Amhara region</a>, and prompt a surge in militant attacks and kidnappings. Moreover, tensions in Tigray between the region&#39;s interim regional administration and the Tigray People&#39;s Liberation Front will threaten to cause a resurgence of violence in the region. Fresh advances by Sudan&#39;s Rapid Support Forces in eastern Sudan could exacerbate security risks in northern Ethiopia. Despite these challenges, Abiy is unlikely to make major concessions regarding <a href="/article/drivers-and-risks-ethiopias-historic-pact-somaliland">Ethiopia&#39;s maritime deal</a> with the breakaway region of Somaliland, which means that tensions with neighboring Somalia will remain elevated. Egypt&#39;s deployment of military personnel and equipment to Somalia will likely compound regional tensions, which could lead to sporadic skirmishes along the border between Ethiopia and Somalia.&nbsp;

Ethiopia Braces for Rising Political and Security Challenges 

Mpox cases in sub-Saharan Africa are likely to keep rising amid slow vaccination campaigns, which could result in the emergence of deadlier and more contagious virus clades and prompt countries to impose screening measures that cause limited trade disruptions. The number of mpox cases is set to increase in many African countries amid slow immunization campaigns caused by a lack of locally available vaccines. The bulk of cases is likely to remain in the Democratic Republic of the Congo, but the disease&#39;s geographical scope is likely to expand, and new mpox hotspots could emerge beyond Central Africa. The growth in cases will raise the likelihood that countries impose disruptive screening mechanisms, a risk that will be compounded should new deadlier or more contagious mpox clades emerge. While these measures are highly unlikely to be as draconian as restrictions imposed during the COVID-19 pandemic given that mpox transmission is not airborne, they could cause disruptions to supply chains &mdash; primarily through delays &mdash; with countries in Central Africa most at risk. Disruptive screening measures could trigger trade disputes and would put downward pressure on the economic growth of affected countries. Furthermore, the ongoing mpox outbreak will increase international pressure on both Congo and Rwanda to abide by an Aug. 4 cease-fire in eastern Congo. While this will raise the prospect of a consolidation of the cease-fire, <a href="/article/where-conflict-eastern-congo-headed">the risk of the cease-fire collapsing</a> will remain elevated throughout the quarter &mdash; something that would greatly complicate the rollout of mpox vaccines in Congo.&nbsp;

Mpox Threatens Supply Chain Delays 

South Africa&#39;s coalition government is likely to advance reforms in the power and rail sectors and maintain fiscal consolidation plans initiated during President Cyril Ramaphosa&#39;s first term. The <a href="/article/challenges-facing-south-africas-new-coalition-government">government&#39;s reforms</a> are likely to be aimed at expanding private sector involvement and investment in the power and transport sectors. This is likely to materialize through state-owned transport company Transnet beginning to open up slots for third-party operators to use its rail infrastructure, but could also include the introduction of reforms to the governance of state-owned enterprises in parliament. Although the involvement of third parties will play an important role in improving the performance of South Africa&#39;s rail system in the medium term, marked improvements are unlikely in the quarter amid persisting security challenges and a gradual uptake by private sector companies. Separately, Finance Minister Enoch Godongwana will deliver his midterm budget speech to parliament and present the coalition government&#39;s first Medium-Term Budget Policy Statement. The latter is likely to remain broadly in line with <a href="/article/cope-low-economic-growth-south-africa-announces-limited-budget-cuts">fiscal consolidation measures</a> during Ramaphosa&#39;s first term, but it will indicate whether the government will accelerate fiscal consolidation. Left-wing opposition parties are likely to prioritize reinforcing their organizational structure rather than actively opposing the coalition government. This suggests that trade unions are likely to be the leading opposition forces to the government over the quarter, which could prompt an uptick in strikes.&nbsp; &nbsp;

South Africa Prioritizes Energy and Transport Sector Reforms 

Elections in Senegal and Ghana could respectively result in policy paralysis and postelection violence, while Tanzania&#39;s elections could heighten internal tensions within the ruling Chama Cha Mapinduzi, potentially delaying the pace of reforms. Ghana will hold general elections Dec. 7. The opposition National Democratic Congress party has accused Ghana&#39;s electoral court of colluding with the ruling New Patriotic Party, and the outcome of the election could well be contested &mdash; which could result in large-scale violence. Even if the elections are not contested, the outcome elections may still unnerve investors, as the NDC has pledged to renegotiate the <a href="/article/despite-downside-risks-ghana-poised-progressive-economic-recovery">country&#39;s International Monetary Fund program</a>, while the NPP has pledged to sign the country&#39;s anti-LGBTQ+ bill into law, threatening multilateral support for the West African country. In Senegal, a snap legislative election will take place Nov. 17 after President Bassirou Diomaye Faye dissolved the National Assembly in an attempt to secure a parliamentary majority to pass his <a href="/article/will-senegals-new-president-overhaul-its-oil-and-gas-sector">left-wing manifesto</a>. The government&#39;s ebbing popularity, however, means that Faye&#39;s PASTEF party could fail to secure a parliamentary majority, which would portend policy paralysis and sustained political tensions that could erode investor confidence. In Tanzania, local government elections will be convened Nov. 27. The government will likely attempt to disrupt the opposition Chadema party&#39;s electoral campaign, but a strong electoral performance by the opposition party could still prompt hard-liners within the ruling Chama Cha Mapinduzi party to become more critical of <a href="/article/opposition-rallies-test-tanzanias-commitment-political-liberalization">President Samia Suluhu Hassan</a>, with political infighting threatening to delay economic reforms.

2024 FOURTH-QUARTER FORECAST

Middle East and North Africa

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