What Our Analysts Are Reading – 1/5/2018

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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.

Joel Whitaker on “When Forecasters Get It Wrong: Always”

“As economic forecasters, we heartily agree with Ruchir Sharma’s point that some important predictions for 2018 will almost certainly be proven wrong. That’s why scenarios are core to FSG’s methodology and we advise clients to pressure-test their strategies against downside and upside risks from our “Events to Watch in 2018.” Type “Events” in FrontierView search for the report, video and podcast!”

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Danyi Yang

Danyi Yang on “China steps up capital controls with overseas withdrawal cap”

“China’s latest effort to control capital outflows comes in 2018 as the government caps overseas withdrawals using Chinese bank cards at 100,000 Chinese yuan (US$15,400) per year for each individual. MNCs should expect to see continued regulatory tightening as China seeks to conserve forex reserves and ease capital flight under weakening economic growth.”

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Dalia Naguib on “Russia resumes civilian flights to Cairo”

“The resumption of Russian flights to Cairo will help support Egypt’s tourism sector and FX supply, especially because Russians historically represent a large part of tourist inflows. However, the real boost will come when Russia resumes flights to Sharm el-Sheikh, which is still under negotiation.”

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Alex Schober on “The other agenda of the Argentine Congress in 2018: Which bills will Macri push?”

“After the extraordinary congressional sessions in December, the Argentine congress still will need to address the capital markets reform and labor reform in February and March. MNCs should be aware of another set of structural reforms that Cambiemos will pursue in 2018. In particular, the administration is targeting overhauls in the electoral, judicial, and education system.”

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athanasia-kokkinogeniAthanasia Kokkinogeni on “A pivotal but tough year looms”

“Greece remains a market to watch for 2018, with considerable risks looming, potentially creating headwinds for the eurozone. In August, Greece’s bailout program ends, and Greece will need to finance its debt issuing bonds. Crucial reforms are necessary for the bailout review, accelerating foreclosures politically sensitive for Tsipras. Moreover, the refugee crisis contines to drain vital resources.”

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Martin Belchev on “What do Romanians buy online?”

“Online shopping services are becoming more prevalent among Romanian consumers, and are projected to continue to play a larger role in their behavior. While most Romanian users use such platforms to purchase clothing and sporting products, household goods have also seen an increase. MNCs should take advantage of these trends and utilize digital solutions in order to reach out to more consumers.”

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Ashu Agarwal on “Fitch upgrades Indonesia rating to BBB”

“The credit rating upgrade by Fitch Ratings indicates Indonesia’s improved ability to weather external shocks. Indonesia has built resilience to external shocks due to an increase in foreign exchange reserves, low inflation, stable monetary policy, and a gradually improving investment climate. Companies can expect a relatively less volatile rupiah despite the three fed rate hikes expected in 2018.”

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