Asia Country Risk Ratings

Brunei Darussalam (BRN)

Brunei’s overall risk level remains medium low. Hassanal Bolkiah has been Sultan and prime minister of Brunei, since 1967. Political violence, political interference and legal & regulator risk remain medium low. Bolkiah spoke on the last day of 2023 about various issues, such as economic diversification labour reforms and the ongoing war in the Middle East. He highlighted two policies that the Monarch introduced in 2023, the introduction of a minimum wage and the reform of the pension fund. The minimum wage has only been set for the banking, finance and ICT sectors to USD 500 per month and the government has not provided details yet about how the minimum wage will be applied to other industries. He also criticised Israel’s actions against Palestine and said that Bruneians will continue to pray and donate money for the Palestinians. His Majesty mentioned that the non-oil gas sector grew by 5.3%, depicting the government’s efforts for a more diversified economy. Supply chain disruption remains low. Brunei is expected to report a positive growth in 2024 of 3.5%, after 3 consecutive years of negative growth, according to the IMF. Brunei’s economy depends highly on the oil and natural gas sector, which accounts for 90% of the country’s exports and 60% of the GDP. CPI is forecast to stay at low levels in 2024 at 1.5%, according to the IMF. Brunei’s current account surplus is expected to rise to 11.6% of GDP in 2024, with a very low government debt/GDP ratio of 2.2%. Sovereign non-payment and exchange transfer thus remain medium low. Brunei’s currency the Brunei dollar is pegged to the Singapore dollar at par and has slightly appreciated over the past 12 months against the U.S. dollar. The risk of doing business remains medium. Brunei is a country with excellent infrastructure, well-educated and a government interested in attracting foreign investment. Banking sector vulnerability and the inability of government to provide fiscal stimulus remain medium low.

Cambodia (KHM)

Cambodia’s overall risk level remains medium high. Hun Sen is no longer be prime minister of the country, after a term of 36 years, as he stepped down after he won the 2023 elections and has handed his position to his son Hun Manet. Political violence remains medium high, political interference remains high and legal & regulatory risk remains very high. Cambodia welcomed Chinese warships in their Ream Naval Base, in what is a preparation for training of the Cambodian navy, according to Cambodia’s Defence Minister Tea Seiha, a situation which is being monitored by the US. Meanwhile, Cambodia has reportedly decided to stop its plan to build a coal-fired power project and will instead build an 800 megawatt natural-gas fired plant. Cambodia is considering building a liquefied natural gas terminal, which will allow to import fuel and turn it into gas to use it for the power plant. Power demand has been increasing by 15% annually in Cambodia and therefore the government has decided to turn also to solar projects and import electricity from its neighbours, due to the volatility of hydropower output. Supply chain disruption remains medium high. Growth is expected to rise to 6.1% in 2024, according to the IMF. Garments, footwear and travel goods account for most of the country’s exports. CPI is forecast to increase to 3% in 2024 and stay stagnant for the next few years. Meanwhile, the current account deficit is projected to continue to decline to -8% of GDP in 2024, with a 35.5% government debt/GDP ratio. Sovereign non-payment remains medium high, as exchange transfer remains medium. The Cambodian riel, the domestic currency has slightly appreciated against the US dollar over the past 12 months. The risk of doing business remains very high, due the high degree of corruption in Cambodia. Banking sector vulnerability remains high and the inability of government to provide fiscal stimulus remains medium high.

China (CHN)

China overall country risk score remains at medium, with the legal and regulatory risk remaining at medium high and political interference at medium.  Despite the rhetoric of a more friendly attitude to business, China authorities continues intermittent crackdowns (e.g. gaming and healthcare) and favoring state owned enterprise (SOE’s) and high quality growth industries. State owned enterprises and local governments are becoming more important in the economy, which is reducing the role of profits and the private sector. The key goal of the authorities is also security and self-sufficiency, with means that GDP growth is less important than previous decades. The election of a pro-China opposition member as speaker of Taiwan parliament will likely be welcome by China, but large scale military exercises are still likely in the spring. A significant escalation with Taiwan also remains unlikely, given the focus on other goals in 2024 and coming years. Meanwhile, China economic measures remain comfortable, with the exchange transfer risk at medium. A current account surplus, plus substantial FX reserves, helps to support this rating (China is also on a multi-year diversification from U.S. Treasuries into gold).  The inability to provide fiscal stimulus remains at medium.  China has room for extra fiscal stimulation should slower growth risk a hard landing, while the dominance of domestic investors means that China’s authorities can persuade investors to rollover debt. However, China is also concerned about total debt/GDP and for now this points to only further targeted fiscal expansion in 2024. Banking sector vulnerability also remains at medium rating, despite worries about the long-term downturn in the residential property sector. Non-performing loans, primarily held by small and city banks, can be managed through potential takeovers by larger banks and local governments.

Hong Kong (HKG)

Hong Kong is assigned a medium-low overall risk. Political interference poses a medium-low risk, and the major development was the introduction of Article 23, a new security law that covers topics such as treason, sedition, and state secrets. It complements the Beijing-imposed national security law introduced in 2020. The approval of these laws has raised concerns in western economies about the future of the city’s position as the global financial hub; it has also prompted worries that this new era could lead to a stage of authoritarianism, where human rights could be transgressed. While the political violence risk remains medium-low, it will be key to monitor developments under this new setting; for instance, twelve people that participated in the pro-democracy protests of 2019 were recently sentenced to jail by a Hong Kong court. On a similar vein, while the city has been characterized by a legal environment that favors business investment by providing strong intellectual property rights, facilitating the mobilization and allocation of capital, and minimizing bureaucratic procedures, the introduction of these laws have sparked unease in companies about the future of regulatory and privacy matters. For instance, the Financial Times reported that the US law firm Latham & Watkins has cut off its lawyers from international databases and that Deloitte and KPMG have asked staff to take burner phones when they visit. Overall, the legal and regulatory risk is medium-low. Both the risks of supply chain disruptions and doing business remain low. Hong Kong has a strong and expanding infrastructure network that facilitates overcoming logistical challenges; however, natural disasters and rising geopolitical tensions between China and the US could negatively affect this factor. The city is characterized by its promotion of competition, openness towards internalization, flow of information, educated workforce, and an established number of developed industries, which improves the business environment. Although, in recent months, there has been a growing concern that not only global financial conditions, but underlying and deeper factors (such as political interference) might be translated into investors being more cautious. From an economic perspective, the IMF forecasts Hong Kong to grow 2.9% both in 2024 and 2025. The anticipated increase in the general government gross debt (as % of GDP) from 7.0% in 2024 to 7.6% in 2025 indicates a less optimistic near-term outlook. The city has experienced a slow post-pandemic recovery, impacted by geopolitical tensions and the lagged effects of monetary tightening in the advanced economies – via the trade and investment channels. The budget deficit for the 2023-24 financial year, exceeding HK$101.6 billion (almost double its original estimate of HK$54.4), results from reduced revenue and weaker-than-expected economic growth; yet, the city still counts with fiscal reserves of around HK$733.2 billion as at 31 March 2024. Furthermore, Finance Secretary Paul Chan has suggested increasing charges for public services, but at the same time ensuring that underprivileged groups would continue to receive support through social security. The sovereign non-payment risk is assessed as medium, with a medium-low risk associated with the government's ability to provide stimulus. Lastly, the exchange transfer risk remains medium-low. Hong Kong authorities intervened multiple times in 2023 to defend the currency peg and traders express skepticism about the authorities' ability to maintain the peg, crucial for financial stability and positioning the city as an international financial hub.

India (IND)

India is expected to maintain a high level of political stability from 2024 to 2028, with the ruling National Democratic Alliance (NDA), led by the Bharatiya Janata Party (BJP), securing a comfortable majority in the Lok Sabha after the general election in April-May 2024. The BJP's victories in state elections are anticipated to bolster its representation in the Rajya Sabha, reducing the risk of parliamentary deadlock.

Prime Minister Narendra Modi's enduring popularity and influence will continue to underpin political stability. The BJP's electoral campaigns have heavily relied on Modi's favorable public image, particularly among rural voters. Consequently, the party may find it challenging to elevate other leaders' profiles over the next term. The government is expected to pursue contentious social reforms, including a uniform civil code, which may fuel public discontent and religious tensions, albeit without significant impact on political stability. Public protests over economic policies are rare, except for agricultural issues.

The declining influence of the Indian National Congress as the main opposition party will persist, prompting opposition parties to form the Indian National Developmental Inclusive Alliance (INDIA). However, the alliance's diversity and sole focus on defeating the BJP may limit its effectiveness. Regional parties are poised to gain prominence, posing a stronger challenge to the BJP than Congress at state and national elections. Extremist organizations in Kashmir will sustain the threat of terrorist attacks, necessitating heightened security measures. The BJP's Hindu-nationalist agenda may lead to minor communal tensions, but widespread social unrest or disruptions to business activity are not expected. Additionally, intermittent clashes with China along the border areas are expected but this will not escalate into a larger open conflict, in our assessment.

Indonesia (IDN)

The Indonesian elections were held on February 14 to elect the president, vice-president, and members of the legislative body. Official results have declared Prabowo Subianto, the incumbent defense minister and candidate of the Gerindra party, as the winner. In our view, the period between now and October, when the new president assumes office, offers Mr. Prabowo ample time to consider his cabinet options and gradually transition into his role from the outgoing president, Joko Widodo (Jokowi). His clear majority provides him with sufficient political leverage to shape his administration. It is anticipated that Mr. Prabowo will continue Jokowi's inclusive approach, incorporating various parties into his administration. On the policy front, he is expected to maintain economic continuity aligned with the Jokowi government. While ongoing flagship projects are likely to proceed, some delays may occur, particularly in the capital relocation project. However, Mr. Prabowo's limited experience in foreign affairs compared to Jokowi may impact efforts to attract foreign investment.

Policies introduced during the Jokowi era, such as the downstream processing of critical minerals and the promotion of electric-vehicle manufacturing, are anticipated to persist. Despite concerns raised by other candidates regarding potential fraud, it is unlikely that any disputes will succeed, and significant protests are not expected.

Macau (MAC)

Macau’s overall risk level remains medium low. Macau operates as a Special Administrative Region (SAR) and is ruled by China. The chief executive of Macau is appointed by China’s government and currently is Ho Iat Seng. The next election for the role of the Chief Executive is scheduled for 2024. Political violence and political interference remain low with legal & regulatory risk at a medium low. Two new national laws have been approved, the first amending the Chief Executive’s election law and the other is designed to protect national security. The new election law forces the Chief Executive to sign a declaration of allegiance to Beijing and Macao. Ho has mentioned that his goals for 2024 are the diversification of the economy, but also the improvement of national security. Supply chain disruption remains low. Growth is expected to drop to 27.2% in 2024, compared to 74.4% in 2023 and is expected to continue to decline in the following years, according to the IMF, as a rebound from the zero COVID policy boosts tourism and gambling. Tourism in Macau has begun reaching pre-pandemic levels, with hundreds of thousands visiting during the Lunar New Year and the Golden Week holiday. For instance, Macau, one of the biggest gambling centres in the world welcomed 217,448 tourists on a single day, during Lunar New Year, which is an all-time record. CPI is expected to be low and stable in Macau at 1.7% in 2024, despite global inflation. Macau’s current account surplus is projected to rise to 32.4% in 2024. Sovereign non-payment and exchange transfer remain medium low. The Macanese Pataca, the domestic currency, is pegged to the Hong Kong Dollar at a rate of 0.97 HKD for 1 MOP. The Hong Kong dollar is also pegged to the USD at a rate between 7.75 to 7.85 HKD per 1 USD. The risk of doing business remains low, with banking sector vulnerability at a medium high.

Malaysia (MYS)

Malaysia’s overall risk level remains medium low. Anwar Ibrahim has remained prime minister of the country, since 2022. Sultan Ibrahim Iskandar has now sworn as the 17th king of Malaysia, who is expected to use his royal power to end political instability. Political violence remains medium, as political interference and legal & regulatory risk remain medium low. The Malaysian PM has made changes in his cabinet in order to rebuild trust, such as the appointment of the chief of the country’s largest pension fund as second finance minister. Ibrahim, has said that his nation will stand with Palestine and maintain ties with Hamas. Malaysia is a Muslim-majority nation and it will not recognise Israel diplomatically until there is a two state solution between the Palestinians and the Israelis. Malaysia’s former Minister of Finance Daim Zainuddin is also being charged for failing to disclose assets and has plead not guilty. Ibrahim has promised to tackle corruption and currently other public figures are being investigated by the Malaysian Anti-Corruption Commission. Malaysia is also expected to review labour agreements with 15 countries, as thousands of immigrants who were promised jobs have been left stranded without jobs. Supply chain disruption remains medium low. Growth is forecasted to rise to 4.3% in 2024 and reach 4.4% by 2025, according to the IMF. Malaysia has agreed with Singapore to develop a special economic zone, that will seek to bring investments and enable the free movement of goods and people. NVIDIA has also come to an agreement with Malaysian YTL’s utilities in a deal that will be worth USD4.3 billion to develop AI infrastructure. CPI is expected to drop to 2.7% in 2024. The key interest rate is expected to remain unchanged until 2026, as expected Fed easing reduce Malaysian Ringgit current weakness. The current account surplus is projected to rise to 2.8% in 2024. Sovereign non-payment and exchange transfer remain medium. Government debt/GDP at 67% is moderately high, but smoothly financed. Malaysia can be considered as an attractive location for businesses, with many policies to encourage foreign investment and relatively low taxation. The risk of doing business remains medium low, with banking sector vulnerability and the inability of government to provide fiscal stimulus at a medium.

Myanmar (MMR)

Myanmar’s overall risk level remains high. Myint Swe continues to act as president with Min Aung Hlaing as prime minister, after gaining their positions through the coup that took place in 2021. Political violence and political interference remain high, with legal & regulatory risk at a very high. The war between Myanmar’s junta and the 3 armed groups has led to the displacement of at least 2 million people across the country. The military junta is considered to outgun all the armed groups, helped by Chinese and Russian aircrafts and heavy weapons. Even so, the junta is believed to suffer from low morale and recruitment difficulties, which have led to the surrender of entire units in some cases. However, the junta is not expected to collapse in the near future. The Arakan Army, one of the three army groups that launched an offensive against the military, said that it has captured Paletwa, an area near the border between Myanmar and India, and will therefore be monitored closely by India. The area is part of a multi-million project, to improve the levels of connectivity, which is backed by India. Supply chain disruption remains very high. Growth is forecast to be 2.6% in 2024, equal to that of 2023, according to the IMF. Oil and natural gas dominate Myanmar’s exports, as well as other minerals, such as precious stones. CPI is forecast to decline to 7.8% in 2024, from 14.2% in 2023. The current account is projected to slightly decrease to -1.5% of GDP in 2024. However, Myanmar’s debt remains relatively high, with a debt/gdp ratio of 63.9%. Sovereign non-payment and exchange transfer thus remain medium high. The domestic currency is the Myanmar Kyat, to which the Central Bank of Myanmar has announced that it will no longer set exchange rates for foreign currencies, will now be floating. The risk of doing business remains high, due to the current war in the country, poor infrastructure and corruption.

Pakistan (PAK)

Pakistan's political landscape has long been characterized by volatility, with elected governments often struggling to serve full terms amidst power struggles, allegations of corruption, and military interventions. The recent general election held on February 8th, 2024, was no exception, marking another chapter in the country's complex political narrative. With the Pakistan Tehreek‑e-Insaf (PTI), Pakistan Muslim League (Nawaz) (PML (N)), and Pakistan People's Party (PPP) emerging as the key players, the electoral contest was fiercely competitive. However, the outcome of the election resulted in a fractured mandate, with no single party securing a clear majority in the National Assembly. Despite the PTI-backed independent candidates winning the most seats, neither the PTI nor its rivals, the PML (N) and PPP, could muster enough support to form a government independently. Thus, post-electoral negotiations ensued, leading to the formation of a coalition government between the PML (N) and PPP, as anticipated by analysts. This fragile coalition, sustained by military backing, now holds the reins of power, with PML (N)'s Shehbaz Sharif returning as prime minister and PPP's Asif Ali Zardari assuming the presidency.

However, the road ahead for this coalition government is fraught with challenges. The precarious parliamentary majority and divergent agendas of the ruling parties pose a significant threat to its stability and effectiveness. With Pakistan facing economic strains, security threats from Islamist groups like the Tehrik‑i-Taliban Pakistan (TTP), and separatist movements in Balochistan, the government must navigate a complex landscape of domestic and international pressures.

In the opposition camp, PTI's Imran Khan remains a formidable force, despite facing legal controversies and electoral setbacks. Khan's vocal anti-establishment stance and substantial public support base continue to pose a challenge to the ruling coalition's authority. Moreover, the PTI's allies, though limited, provide further ammunition for the opposition to mount political challenges and mobilize dissent against the government.

Internationally, Pakistan's relations with key partners such as China, India, and the US remain critical to its geopolitical positioning and economic stability. While China continues to be Pakistan's leading economic and strategic ally, concerns over debt sustainability and political instability have prompted caution in bilateral engagements, particularly regarding projects under the China-Pakistan Economic Corridor (CPEC). Tensions with India persist over longstanding issues like Kashmir and cross-border terrorism, posing a constant threat to regional stability. Meanwhile, Pakistan's relationship with the US faces challenges amid Washington's growing engagement with India and concerns over Pakistan's alleged support for militant groups.

Philippines (PHL)

Philippines’s overall risk level remains medium high. Bongbong Marcos remains president of the country. Political violence remains high, with political interference and legal & regulatory risk at a medium high. In December a Chinese and Philippines vessel collided, which led to the trade of accusations between the two countries. Under the presidency of Marcos tensions between China and Philippines have grown, with the latter seeking closer diplomatic ties with the U.S. The Philippines and Canada have also come into a defence cooperation agreement. Philippines ambassador in the U.S. has additionally mentioned that the U.S. elections will not change their Indo-Pacific strategy. China also accused a vessel of the Philippines’ of intruding into Beijing waters, something that was characterised as inaccurate by the Philippines coast guard in the disputed South China sea. China’s claims of its territory over the South China Sea, a channel for more than USD 3 trillion in annual ship commerce, overlap with those of Philippines. A joint air patrol has been placed by the Philippines and the U.S. to protect their interests in the South China Sea. Marcos has also approved the third phase of the military’s modernisation which will cost around 2 trillion pesos over several years and includes buying submarines. Supply chain disruption remains high. Growth is expected to rise to 5.9% in 2024, according to the IMF. The Philippines will host an auction for energy projects in Mindanao, which has attracted local, but also international energy firms,

Singapore (SGP)

We foresee ongoing political steadiness in Singapore for the medium term under the technocratic governance of the People's Action Party (PAP), which holds a significant majority in parliament. While the PAP's dominance was slightly diminished in the 2020 election with the increased vote share of the main opposition Workers' Party (WP), the transition from the PAP's "third generation" leadership, currently led by Prime Minister Lee Hsien Loong, to the "fourth generation" (4G) leadership, headed by Lawrence Wong, the Deputy Prime Minister and Finance Minister, has been delayed due to pandemic-related distractions. Nevertheless, we anticipate this leadership transition to occur by November 2024, ensuring political stability and policy continuity.

The PAP's focus will be on bolstering the popularity of the 4G leadership by addressing rising concerns regarding social inequality, immigration, job/skill mismatches, and the perceived inadequacy of the social safety net. This may lead to a slightly less conservative fiscal policy stance. Additionally, the party will consider some progressive social reforms to attract younger, more liberal voters. In 2022, authorities announced the decriminalization of consensual same-sex relations while maintaining heterosexual marriage in the constitution. However, such social policy changes will likely be gradual to avoid alienating older conservative supporters, who constitute the core of the PAP's base.

While Singapore's ethnic diversity poses a minor risk to political stability, the government has taken measures to enhance the political representation of ethnic minorities, such as Indians and Malays. Nonetheless, the ethnic Chinese majority is expected to remain the predominant political force, and the likelihood of a non-Chinese prime minister remains low. Despite this, racial tensions are unlikely to spark significant unrest due to strict censorship laws and limitations on public demonstrations.

Taiwan (TWN)

The Taiwan overall country risk score of medium-low reflects economic strength and only moderate and intermittent tensions with China over reunification.  The death of two China fishermen in the Taiwan straits is causing rising tension between China and Taiwan coastguards, while large scale military exercises are likely in the spring and ahead of DPP Lai Ching taking power as president on May 20.  Nevertheless, China will be pleased that a pro-China politician from Kuomintang, Han Kuo Yu, has been elected speaker of the Taiwan parliament.  With the DPP in opposition in parliament, divided government means that Taiwan new president will focus on domestic issues (e.g. social welfare) and be less likely to rock the boat with China.  Military strategists also argue that the risk of full scale invasion by China remains low in the next few years, as a seaborne operation would require a much stronger China navy to counterbalance the risk that the U.S. supports Taiwan by blockading key China ports. Thus China will likely pressure Taiwan but stop short of major escalation.  Indeed, any invitation for Taiwan’s new speaker to visit China would be a positive signal in cross straits relations. Economic indicators remain strong helped by a well-structured economy/controlled inflation and a huge current account surplus.  This leaves exchange transfer at a low rating, while the risk of doing business remains at a low rating. Risk of sovereign non-payment is low, which reflects the low government debt/GDP trajectory. 

Thailand (THA)

Political stability in Thailand faces heightened risks following the Election Commission's (EC) proposal to dissolve the opposition Move Forward Party (MFP) in March. The MFP, which secured the most votes and seats in the May 2023 election, and its leader, Pita Limjaroenrat, have been accused of attempting to undermine the constitutional monarchy through their campaign to amend the lese-majesty law. The dissolution order, expected to proceed, may lead to a ban on the MFP's leadership from seeking political office for ten years, potentially triggering large-scale protests by MFP supporters. However, we anticipate strict security measures to contain protests, limiting the risk of violence. Tensions over monarchy reforms, a contentious issue in Thai society, are likely to persist, affecting political stability in the medium term.

Despite the potential for protests, the hold on government by the Pheu Thai Party (PTP) under Srettha Thavisin is expected to remain unthreatened. However, intra-coalition politics within the PTP-led government may present challenges, given the differing interests of its constituent parties, particularly the military-aligned Phalang Pracharat (PP) and United Thai Nation (UTN) parties. These parties aim to maintain the status quo that favors the army and establishment, conflicting with the PTP's democratic representation pledges. While the military will continue to exert influence over the coalition, the risk of a coup during the forecast period is low. Meanwhile, mistrust of Thaksin Shinawatra, the PTP's de facto leader, remains a unifying factor among reformists and conservatives. Thaksin's release on parole and his daughter's election as the new PTP leader have intensified criticism, making him a liability to the government. A referendum on constitutional change is anticipated, leading to some democratic reforms that do not explicitly challenge the royal-military establishment.