What Our Analysts Are Reading – 3/2/2018

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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.

Danyi Yang

With China’s enhanced policy focus to reduce industrial overproduction and crack down against pollution, its once prosperous northeastern provinces are struggling. Multinationals should continue to re-evaluate the shifting market opportunities within the country and re-consider manufacturing and other investment options. Check out FSG’s most recent China Quarterly Market Reviews for more details.”

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Martin Belchev on “The Latest: More calls for resignation of interior minister”

“Pressure on the coalition government is mounting, following the murder of a journalist who was involved in investigating government links to organised crime. With two senior official having resigned and public protests looming, the coalition is on the verge of collapsing again. MNCs should monitor the situation closely as an early election may result in a renewed period of policy unpredictability.”

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Alejandro Valerio on “Venezuela postpones presidential election to May 20”

“Venezuela postponed its presidential election to May 20, aiming to provide some legitimacy to an electoral process deeply flawed. FSG considers this will not solve the governance crisis, since most of the opposition decided to boycott the elections.The Lima Group, the US, and the EU will likely maintain the political and economic pressure on Maduro’s government and Venezuela’s economy.”

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Ryan Connelly on “Trump’s tariff war nudges Cohn toward White House exit”

“Gary Cohn has been an important voice in the Trump administration advising the President against protectionist trade measures. He seems to have lost the battle, and may be giving up on the war altogether. The move towards aggressive protectionist measures invites retaliatory responses, and is a key signpost in our ‘Events to Watch’ for the potential for a NAFTA exit and a China-US Trade War.”

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JosefJosef Jelinek on “China warns Taiwan playing with fire over U.S. bill”

“President Xi Jinping declared in October that China “has become a great power in the world” and “it is time for us to take center stage.” An increasingly confrontational China, convinced of its exceptionalism and right to rule as a regional superpower risks a dangerous conflagration with the US and its allies. As tensions rise, companies can expect China to take retaliatory measures against them.”

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Alex Schober on “Argentina economic activity expands 2.8 pct in 2017 vs 2016”

Argentina’s economy – as shown by the EMAE economic activity index proxy – expanded 2.8% in 2017 YOY, slightly above FSG’s forecast of 2.6%. Growth was led by construction. Argentina’s statistics agency, INDEC, will release Q4 GDP growth and 2017 GDP growth based on demand-side components on March 21. FSG forecasts 3.1% growth in 2018 thanks to strong investment growth.”

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William Attwell on “South Africa’s Ramaphosa says aims to resolve land issue ‘once and for all'”

“President Ramaphosa is adopting a populist line on land reform to appease the radical faction of the ruling party and restore unity after the bruising leadership battle in December 2017. While land expropriation in unlikely to mirror Zimbabwe’s disastrous experience, the move will dampen confidence and reduce investment in agriculture.”

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