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.
Danyi Yang on “China eyes role as world’s power supplier“
“China is actively promoting global electricity networks as part of its plan to shift industrial overcapacity to overseas markets. Check out FSG’s recent research on the Belt and Road Initiative (BRI) to align internal stakeholders and evaluate the BRI’s implications for global and regional businesses.“
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Alex Schober on “Argentina agrees $50bn financing deal with IMF“
“Argentina’s deal with the IMF ended up being better than expected: it will be a USD 50 billion line of credit over three years (compared with the USD 30 billion originally predicted). Argentina will not need to change its primary fiscal target of 2.7% of GDP in 2018, but will have to cut it to 1.3% from 2.2% next year. FSG will be monitoring how the government presents the deal in Argentina.“
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William Attwell on “Ethiopia parliament lifts state of emergency“
“The parliament’s decision to lift the six-month state of emergency is an important juncture in the new Prime Minister Abiy Ahmed’s tenure and should go some way towards reducing tensions in the flash-point provinces of Oromia and Amhara. Expect conditions for MNCs to improve as Ahmed rolls out his reform agenda, keeping in mind that progress will be gradual.”
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Ashu Agarwal on “Indonesia Central Bank Chief to Raise Rates Again If Needed“
“The rupiah has been one of Asia’s worst-hit currencies in the ongoing emerging markets selloff. As a result, Bank Indonesia hiked interest rates twice to stabilize the currency and stands ready to raise rates further if required. Higher rates would raise borrowing costs and reduce distributors’ ability to maintain inventory. Look out for our upcoming Indonesia market review for more details.“
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Athanasia Kokkinogeni on “CBI cuts forecast for UK economic growth as Brexit concerns linger”
“International institutions recently caught up with FSG’s prior forecasts of the UK growth slowing to 1.4% YOY in 2018 from 1.8% YOY in 2017. This is the slowest growth the UK has seen since 1992 excluding the 2008/9 financial crisis. In 2018, MNCs should expect higher operating costs across sectors coupled with weaker B2C and B2B demand, weighing on theirs and their partners’ profitability.”
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Ryan Connelly on “‘Get Moving’: How Trump Ratcheted Up the Trade Battle With China”
“This behind-the-scenes account of tariff setting under Trump is important, because it points out another important element in Trump’s decision-making calculus: the importance of appearing strong in the media. As FSG argued, the Mnuchin brokered deal with China was not going to last - not just because Trump believes in tariffs, but because he was being attacked by the Right for being soft.”
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Martin Belchev on “2019 budget is budget of safe growth“
“The Hungarian government announced that the 2019 budget is focused on sustainability and backtracked on its economic package plans. The cabinet reiterated that external risk is affecting spending, but concerns coming from the EC over growing deficit may have contributed to this decision. Prioritizing strengthening the reserves means that government demand next year may be considerably milder.”
Link to article | Read More of Martin’s Commentary | Have a Question for Martin?