The Atradius Risk Map gives an overview of the level of risk associated with countries worldwide. It is based on data gathered by our Economic Research Team and focuses on a variety of factors.
The Atradius Risk Map is drawn from a range of sources and features the STAR rating system. This is a system devised by the Atradius Economic Research Team for assessing country risk, including different political and economic trade risks, or civil unrest and conflict.
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.
Movement Focus
2023 Q4
Costa Rica: Costa Rica has moved into the moderate risk category, reflecting the structural improvement of government finances following strict fiscal consolidation and sustained access to financing. The exchange rate has become more flexible and official reserves have strengthened, reducing transfer & convertibility risks.
The Gambia: The Gambia’s economic outlook is positive, driven by a recovery in the tourism sector, fuelling greater investments in construction and infrastructure. We expect a successor IMF programme to begin this year, further improving public finances and boosting the growth outlook though the risk of social unrest persists.
Niger: Niger’s economy is struggling under stringent international sanctions imposed following the military coup last July. There’s still no roadmap for an acceptable power transition, preventing the disbursement of IMF funds, increasing economic distress and security risks.
2023 Q3
Gabon: Political uncertainty is high following the military coup in August that ousted the long-standing president, Bongo, and could cause the security situation to deteriorate. The shock is also detrimental to economic growth and investment in Gabon’s oil-dependent economy.
UAE: The political and economic situations in the UAE have been stable and the growth outlook remains robust. The UAE favours a balanced approach to diversifying and greening its economy which is positive for foreign trade and investment, while also contributing to steady improvements in public finances.
Bolivia: The risk of dollar shortages and a disorderly devaluation of Bolivia’s overvalued exchange rate are very high. International reserves are declining from already low levels and the government has resorted to borrowing from multilaterals and the central bank to selling gold, in order to support the fixed exchange rate.
2023 Q2
Ghana: Ghana’s government is in default. While the sovereign has finally sealed a deal with the IMF to get public finances back in order, the program entails strict fiscal consolidation which will weigh on economic growth. The risk of fiscal slippage is high given elections coming up in 2024.
Burkina Faso: The political and security situation in Burkina Faso is fragile and uncertain. The ongoing threat of Islamist military groups which control large swathes of territory will likely delay the holding of democratic elections to replace the current military government. This and weak confidence in the rule of law will keep growth prospects subdued.
2023 Q1
Croatia: As of January 1st 2023, Croatia joined the Schengen area and adopted the euro. Full eurozone integration should benefit its tourism industry (25% of GDP). The political situation is stable and fiscal transfers from the EU recovery fund will continue to underpin economic growth.
Nicaragua: Strong remittances on the back of outward migration have supported Nicaragua’s economic recovery and official reserves, reducing sovereign and transfer & convertibility risks. These risks remain elevated though and political repression ensures tightening sanctions and increased isolation.
Tunisia: Tunisia’s structurally weak economy has fallen deeper into crisis since Russia’s invasion of Ukraine sharply increased food and energy prices. Political instability continues to block the ratification of a much-needed IMF reform programme, increasing the risk of sovereign default and a balance of payments crisis.
Read the risk map for more information.
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’.
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.
