Country Risk Map
Largest decrease in CRP from previous quarter
- Venezuela
- Uruguay
No CRP decreases from previous quarter
Largest increase in CRP from previous quarter
- Syria
- Mali
No CRP increases from previous quarter
No changes in CRPs this quarter
How has country risk evolved?
Our interactive map, above, shows just how much country risk has evolved over the past decade. Some countries have become much riskier to operate in, whilst others have seen their risk levels fall. An analysis of country risk trends can help organisations identify these risks and opportunities early on in their planning processes.
For companies that have international operations or are considering opportunities abroad, managing and accounting for country risk will be a key consideration.
How can we help?
Our country risk service can help companies to quantify and manage such risks in order to make better business decisions.
We calculate Country Risk Premiums (CRPs) for 186 sovereign nations using an economic model that we have developed since 1998. Our model uses a range of inputs in generating CRPs, including reliable sources of credit and risk ratings and sovereign bond information.
For more information, please contact a member of the team below.
Commentary for key risk trends in Q1 2020
COVID-19 pandemic is spurring a sharp increase in global CRPs
The COVID-19 pandemic has contributed to a sharp rise in country risk this quarter, with regional average CRPs rising to levels last seen in the ‘taper tantrum’ of 2015/16 and nearly as high as in the global financial crisis of 2008/09. Rising risk premia have been observed across all regions, from 0.5% in Europe to 2.7% in the Middle East and North Africa (MENA), reversing the general trend PwC has observed of falling CRPs in 2019. Rising country risk might be explained by two factors. Firstly, the unpredictable nature and rapid escalation of COVID-19 has led investors to seek ‘safe havens’1 in developed countries with mature bond markets, despite the sharp contraction in economic growth these nations are experiencing. At the same time, some emerging markets are likely to have lower fiscal capacity to respond to the shock and may be more vulnerable to a broad-based economic downturn. It should be noted that PwC Country Risk model has used bond market and risk rating information as of 16th March 2020 and the fast-moving nature of the situation means that the full impact of the pandemic is unlikely to be fully reflected in the assessment of country risk reported in this update.
MENA region also buffeted by global oil price and travel trends
As we have described above, average CRPs in the MENA region have increased the most of any region this quarter. The region has likely been buffeted by two consequences from the sharp downturn in global demand – the fall in the oil price and reduction in tourist numbers2. The oil price has fallen from US$68.04 on December 16th, 2019, the time of our Q4 2019 update, to US$27.98 by March 16th 3. With many of the region’s largest economies highly dependent on oil revenues to fund national budgets, this has added to domestic economic pressures. Global travel restrictions and ‘lockdown’ measures have also seen many holidays cancelled to the region’s most popular tourism destinations, likely leading to a squeeze on foreign exchange earnings.
1Financial Times, ‘Treasury bill yields turn negative in sign of investor fear’ (2020) - https://www.ft.com/content/317bbb84-694f-11ea-800d-da70cff6e4d3
2IHS Markit, ‘Impact of COVID-19 virus on the MENA region’ (2020)
3https://www.eia.gov/dnav/pet/hist/rbrteD.htm