Risk Map

Country risk

Companies that do business internationally rely on the stability of the business environment in the foreign country. Profits and investments can be vulnerable to adverse developments in this environment. These risks are broadly termed ‘country risk’. The level and change in country risk is, therefore, an important strategic and operational indicator for international companies.

Country risk covers a wide range of factors such as political developments, the risk of (armed) conflict and sovereign financial situation. These factors relate, for example, to regulatory changes, the risk of confiscation, civil unrest, war, currency controls and devaluations. Country risk takes into account a sovereign’s willingness and ability to pay and the impact of this on the ability of public or private entities to meet their cross-border payment obligations. Under our political risk cover contract, we provide cover against a subset of ‘country risk’ events. If you would like to learn more information about an individual market and their STAR rating, see our Country Reports. 
 

Download Country Risk Rating Background
 

 

 

 

Movement Focus
 

2025 Q1

El Salvador: El Salvador’s risk profile is slightly improving thanks to the regaining of market access and a much-awaited IMF program. The risk of sovereign default has eased but implementation risks remain high. Full dollarization and external assets of the corporate sector mitigate currency, transfer & convertibility risk.

Latvia: Latvia's economic situation has weakened in the past few years – in part due to the negative impact of the Russia-Ukraine war on the investor sentiment and public finances – and it has some regional disadvantages against its Baltic neighbors. Risks to political stability are high but the political consensus is pro-EU.

Mongolia: Mongolia's been upgraded due to an improving political situation and strong growth outlook, but country risk remains moderately high. Its poorly diversified economy leaves it vulnerable to external shocks and expansionary fiscal policies are likely to widen external and internal imbalances.

2024 Q4

Greece: Greece is maintaining steady economic momentum on the back of rising consumption and investment, underpinned by the EU’s Recovery and Resilience Facility. Improving economic fundamentals and prudent fiscal policy has helped the country weather shocks from the pandemic and energy prices.

Ethiopia: Financial pressures in Ethiopia have eased as a new IMF program commenced over the summer. But the sovereign remains in default and the ongoing debt restructuring negotiations are slow-moving. Governance and development indicators are poor and political instability and security risks are high.

2024 Q3

Argentina: Bold policy actions under the new president have helped stabilize the Argentinian economy and grow official reserves. But these improvements are from very low levels: official reserves are still insufficient, macroeconomic imbalances remain sizeable and a long and difficult adjustment process lies ahead.

Bolivia: Country risk in Bolivia is increasing as the sovereign is running out of options to finance its wide fiscal deficits. Dollar shortages have already resulted in informal currency restrictions and payment delays. The risk of a disorderly devaluation of the overvalued currency has further increased.

2024 Q2

Egypt: With the re-anchoring of a new financial program, Egypt’s growth prospects are improving in the coming years. Balance of payments problems are no longer acute due to a flood of financial aid. Reform progress has resumed including renewed exchange rate flexibility.

Saudi Arabia: Hydrocarbons production will remain the mainstay of the Saudi economy in the medium term but the Vision 2030 economic diversification strategy is driving infrastructure development and stronger GDP growth prospects. Saudi Arabia also benefits from strong external buffers and capacity to withstand another oil price drop. 

Panama: Panama’s risk profile has deteriorated due to persistent fiscal pressures exacerbated by uncertain consolidation prospects and higher US interest rates. The economy remains resilient, underpinned by a well-developed financial system and manageable government and external finances. Full dollarization limits transfer & convertibility risk.

 

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The Atradius STAR rating

STAR is the Atradius in-house political risk rating. STAR stands for Sovereign Transfer and Arbitrary Risk and represents a rating system for assessing country risk. The STAR rating is a summary measure of political risk relevant to the Atradius trade credit insurance contract and explicitly targets the impact on public or private entities with cross-border payment obligations.

Broadly speaking, the default triggers under an Atradius Political Risk Policy are classed as either Sovereign Transfer or Arbitrary Risk.

The STAR rating runs on a scale from 1 to 10, where 1 represents the lowest risk and 10 the highest risk. The 10 rating steps are aggregated into five broad categories to allow their interpretation in terms of credit quality. Starting from the most benign part of the quality spectrum, these categories range from ‘Low Risk’ to ‘Very High Risk’.
 

Download STAR Rating Background Information

 

Disclaimer:

This map is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is accurate to our best knowledge and belief at time of publication but it does not aim to predict future developments. All information in this report is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any consequential, special or similar damages, even if advised of the possibility of such damages.