Each week Frontier Strategy Group’s global team shares their view on key media stories, and what the implications are for businesses that operate in emerging markets. For more information about how to contact our analysts, send us an email.
Lauren Goodwin on “Europe’s Banking Crisis - Drivers and Signposts to Watch”
“Europe’s banking crisis has returned. FSG believes that renewed attention on non-performing loans in Europe will have larger effects on the region’s economy than simply through falling equities prices. Instead, the weakness of bank profitability across Europe, and this time particularly in Italy and Germany, will reduce credit available to households and businesses, reducing business activity.”
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Pablo Gonzalez on “Mexico’s Response to Falling Oil Prices and FX Volatility Will Dent Short-Term Growth”
“With the interest rate hike announced by Banxico last week and with the Mexican government having announced additional budget cuts of 0.7 percent of GDP in 2016, it is clear that Mexican policy makers have decided to prioritize macroeconomic stability over growth, at least in the short term.”
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Mark McNamee on “Stirrings of Labor Unrest Awaken As Russia’s Economic Chill Sets In”
“While we certainly do not expect a Russian Arab Spring, we believe there will be a significant rise in economic/labor protests throughout 2016, which MNCs will have to contend with - particularly in cities dominated by a single industry. MNCs should prepare for this reality but concern should be measured: these minor protests have very limited potential to escalate and cause instability.”
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Matthew Spivack on “It’s Official: VAT Will Arrive in the UAE by 2018”
“The new VAT will help the UAE government to offset falls in revenue due to lower global oil prices. This development moves the UAE away from the zero-tax environment that was instrumental in drawing foreign investors to set up in the past. However, the country’s significant development over the last decade and its status as a regional hub will continue to attract FDI in the coming years.”
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Alec Lee on “Brazil Senate Votes to Limit Petrobras Role in Deep Waters”
“Though the bill must still be approved in the Chamber of Deputies, the impact once passed and signed by the president will be meaningful for Brazil’s oil and gas sector. However, the move could also make it more difficult for Dilma to maintain the support of the left for other crucial measures such as pension reform.”
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