Country Risk Month Ahead: July 2025

Our country risk experts provide insight into events that could impact the geopolitical landscape in July.

The US government and the European Commission are negotiating on bilateral trade arrangements, seeking an agreement by the US deadline of July 9. These talks were triggered by President Donald Trump’s April 2025 announcement that, without a new deal, the US would impose a 50% “reciprocal” tariff on EU goods. The US government has also pledged to prioritize reshoring and other measures to reduce its annual trade deficit with the EU of around €200 billion.

The US government appears unlikely to accept the EU’s proposal to introduce zero-for-zero tariff regimes applicable to a broad array of products including chemicals, machinery and pharmaceuticals. Instead, it is more likely that a US-EU agreement would be similar to the US’ arrangements in May with the UK and include the US’ preferred 10% baseline tariff for all imports. Regulatory impacts are likely, with a high probability that the EU will offer the US the removal of some non-tariff trade barriers.

Following the US/Qatari-brokered ceasefire to the 12-day war between Israel and Iran on June 24, nuclear talks are likely at some point to resume between the US and Iran, with US President Trump initially stating that representatives would be meeting the following week, although this has not yet been confirmed by either side.

With Iran’s nuclear, military and proxy capabilities significantly degraded as a cumulative result of Israeli military operations, Iran’s leverage is very likely to have decreased.

The key issues still to be resolved include Iran’s domestic uranium enrichment activity (whether the US would allow a minimal level or Iran would concede to the US’ zero enrichment demand), the status of the approximately 400 kg of highly enriched uranium that Iran claimed to have been able to relocate before its nuclear facilities were struck, and whether talks would seek to constrain other non-nuclear aspects of Iran’s state conduct.

Trump on June 25 made statements suggesting he would settle for a commitment by Iran to permanently forgo a nuclear weapons capability, and that a deal may no longer be necessary given the bombardment of key components of Iran’s nuclear program. Should talks fail to produce a verifiable agreement that was also acceptable to Israel, Israel would likely conduct further strikes in the one-year outlook if it assessed that Iran was taking measures to significantly reconstitute its nuclear enrichment and/or ballistic missile capabilities, or if Iran had begun measures to assemble a working nuclear device. This would maintain the existing “severe” risk of interstate war, and of that expanding into a regional war.

Brazil will host the 17th BRICS Summit, scheduled for July 6–7, 2025, in Rio de Janeiro. The meeting will involve the expanded BRICS bloc comprising Brazil, Russia, India, China, South Africa, Indonesia, Egypt, Ethiopia, Iran, the United Arab Emirates and Saudi Arabia, being held with the theme of “Strengthening Global South Cooperation for More Inclusive and Sustainable Governance.”

Brazil has indicated that the summit agenda will span areas such as global health cooperation, increasing foreign direct investment, expanding use of local currencies in trade, climate change and AI governance.

Based on prior BRICS meetings, and given its recent expansion, the bloc is likely to lack cohesion, limiting tangible policy outcomes. It is likely to struggle to agree to a final unified declaration, given dissent between BRICS members prior to the summit.

Still, Brazil will use the BRICS meeting as a platform to project global leadership within emerging markets and to promote its stance of favoring multilateralism and pursuing an autonomous foreign policy from the US. Support for a growing role for the New Development Bank, the BRICS’ bank, also will be a concrete objective for Brazil at the summit.

Japan’s House of Councilors (or Upper House) election, scheduled for July 20, 2025, will serve as a referendum on Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP)-Komeito coalition government, which lost its Lower House majority in October 2024 for the first time since 2009.

The election’s outcome is very likely to determine Ishiba’s political future. The coalition needs to win at least 50 of 124 contested seats to maintain its simple majority in the 248-seat chamber. In a scenario where the coalition retains its majority, this would bolster Ishiba’s position within the LDP through at least the remainder of 2025, indicating policy continuity (in support of defense spending increases and “rural revitalization”) and likely increased scope for the government to negotiate a partial trade agreement with the administration of US President Donald Trump.

If the coalition loses its majority, its ability to influence legislation in the National Diet (where the Upper House can delay or block non-budgetary legislation) would be significantly weakened. While opposition parties remain fragmented and likely unable to form a new government, a major loss for the LDP or a hung Upper House would lead to significantly greater pressure from rival factions within the LDP for Ishiba to step down. Ishiba’s resignation in this scenario would likely trigger a leadership race and snap Lower House elections, indicating a high risk of a change in government in Japan in the three-month outlook. 

Ghana’s Finance Minister Cassiel Ato Forson will present the Mid-year Fiscal Policy Review (FPR) in July, covering the 2025 budget period. The FPR is highly likely to focus on continuing measures to control inflation, which declined to 18.4% year over year in May from 21.2% year over year in April and a peak of 23.8% in December, but remains above the Bank of Ghana’s target band of 6%-10% for 2025.

Declining inflation has been assisted by recent currency appreciation, with the cedi around 35% stronger against the US dollar during June than a year previously, providing scope for further reduction of inflation in the June release. Overall, economic indicators are positive, with Ghana having achieved 5.7% real GDP growth in 2024, against an initial target of 3.1%, and 3.1% in 2023.

Foreign exchange liquidity is also likely to be boosted by the International Monetary Fund having announced on April 15 that it had reached a staff-level agreement on the fourth review of Ghana’s Extended Credit Facility (ECF), allowing Ghana to access a further US$370 million once approved by the IMF Executive Board, bringing total disbursement since the ECF commencement in May 2023 to US$2.4 billion (80%).