Americas: Argentine farmers launch commercial strike to protest export tax hike

Sectors: agriculture; all
Key Risks: business risks; strikes; transport disruption; protests

In Argentina, farmers launched a four-day commercial strike on 9 March which could also lead to disruptive protests on the country’s main roads. On 5 March the Rural Confederations of Argentina (CRA) announced the strike to protest the government’s decision to raise export taxes on soybean products to 33 from 30 per cent. The country’s other three main farmers’ groups are also joining the disruptive action, which will include the suspension of trade in grains, likely affecting international grain markets. Leftist President Alberto Fernandez’s administration raised the export taxes on 5 March as part of attempts to increase revenue amid ongoing negotiations with the IMF and private creditors to restructure around US$100bln in debt. Tensions between the government, who is unlikely to backtrack, and the powerful agriculture sector are bound to continue to increase over the coming weeks.

Asia-Pacific: Malaysia’s Prime Minister Muhyiddin Yassin announces new cabinet

Sectors: all
Key Risks: political instability; civil unrest; economic risks

Malaysia’s Prime Minister Muhyiddin Yassin announced his new cabinet, appointing most ministerial positions from his Bersatu party and the United Malays National Organisation (UMNO). Gabungan Parti Sarawak (GPS) has four positions and the Malaysian Islamic Party (PAS) has three. The four appointed senior minister positions went to former Pakatan Harapan (PH) member Azmin Ali for international trade and industry, UMNO Vice President Ismail Sabri for defence, Bersatu Vice President Fadillah Yusof for works and Bersatu information chief Radzi Jidin for education. Among the ministerial appointments was Hishammuddin Hussein – the cousin of Najib Razak – as foreign minister. UMNO’s importance to the cabinet will likely result in increased public criticism of the new government and, despite GPS support, it is far from clear that Muhyiddin will have the votes necessary to survive a vote of no-confidence in May.

Eurasia: Rosneft to increase output; Taliban-Afghan talks delayed

Sectors: all
Key Risks: energy, security; political stability; war on land

Russian-state oil company Rosneft is likely to boost its output when the current OPEC+ deal ends at end-March. The move demonstrates that the firm does not believe the collapse of the cartel with Saudi Arabia will fundamentally undermine its global position, though there is a risk the two could spiral into a price war. Russia’s debts now outweigh its reserves and, while the ruble will likely falter further, the Kremlin can handle an 18-month sub-US$30 price per barrel with ease. Elsewhere, the Taliban announced that talks scheduled for 10 March with the Afghan government were unlikely to take place on time due to parallel swearing-in ceremonies organised by presidential rivals Ashraf Ghani and Abdullah Abdulla. There is a risk such delays could lead to a collapse of the agreement

Europe: Italy imposes mass quarantine and is set for recession; minor tax hikes likely in UK

Sectors: all
Key Risks: force majeure; recession; credit risks

Italy is all-but-guaranteed to fall into recession this quarter. On 8 March authorities announced widespread quarantine measures affecting nearly 20 million people in its north, the country’s economic heartland, over the spread of coronavirus-induced COVID-19. They will remain in place until at least 4 April. The measures could spread beyond the provinces of Lombardy, Emilio-Romagna and Veneto, with infections reported across the country already. In the UK, the Treasury is expected to announce some tax increases on 11 March when the next draft budget is released. Meanwhile, Prime Minister Boris Johnson is at risk of facing his first parliamentary defeat since winning the December 2019 general election over the coming week as sufficient backbench Conservative MPs are expected to pass a bill with opposition support calling for Chinese telecoms giant Huawei to be wholly banned from the UK’s 5G network.

MENA:  Beirut defaults; Saudi crown prince detains rivals; Israeli constitutional crisis looms

Sectors: all
Key Risks: credit risks; political instability; civil unrest

On 9 March Beirut defaults on a US$1.2bln Eurobond issuance, the first default in Lebanon’s history triggered by a high debt burden exacerbated by a liquidity crunch. Reform and austerity measures could heighten the protracted civil unrest. Beirut has another US$1.3bln maturing between April and June. More detentions of Saudi royals are likely as Crown Prince Muhammad bin Salman looks to consolidate his route to monarchy following the detention of four senior princes. Official results of Israel’s 2 March election will confirm that Prime Minister Benjamin Netanyahu’s Likud party won the most seats in Knesset, but short of a majority. A constitutional crisis may occur as it is unclear whether he can even be premier facing criminal charges, the trials for which begin on 17 March. He will attempt to delay or get immunity to prevent a fourth election.

Sub-Saharan Africa: Sudanese PM Hamdok survives assassination attempt, risk of civil unrest

Sectors: all
Key Risks: political violence; civil unrest

Sudanese Prime Minister Abdalla Hamdok survived a car explosion on 9 March likely targeting his motorcade when entering his office in Khartoum. No casualties were reported and there was no immediate claim of responsibility. The transitional government, formed in August 2019, has been under pressure to restore stability and end conflict in Darfur, Kordofan and Port Sudan. Violence between Arab and Masalit communities in Darfur resurged in January and peace talks with the government were suspended. Local armed groups or elements within the army could be responsible for the attack. The protest movement that led the uprising against former president Omar al-Bashir called the blast a terrorist attack and encouraged people to take to the streets to demonstrate their support for the transitional government. An increase in unrest and violence cannot be ruled out.