What Out Analysts Are Reading – 3/23/2018

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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.

Antonio Martinez

“While interest rates remain at historically low levels, consumer borrowing costs will continue to edge significantly higher over the next two years. This will provide another limit to consumption growth in the United States, especially as real wage growth remains moderate.

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Danyi YangDanyi Yang on “Trump to Ramp Up Trade Restraints on China”

“With a package of import tariffs targeting China to be released this week, the Trump administration is also seeking to block Chinese firms’ acquisition of US technology and investment in American firms. US companies operating in China should evaluate potential ramifications for their businesses in China, if the country retaliates by further limiting market access for foreign firms.

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Martin Belchev on “​Sberbank and Agrokor Reach Agreement”

“The fate of the indebted Croatian retailer giant Agrokor continues to represent a major risk to the economic stability of the market in 2018. Therefore, the new deal between the company and its chief creditor Sberbank, which had initiated a number of lawsuits against Agrokor, will lead to existing risks subsiding and will boost overall investor confidence in the economy.

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“MNCs will see a more favorable operating environment in France, in light of President Emmanuel Macron’s labor reforms. Macron is accelerating reforms of the public transport provider SNCF to increase efficiencies. However, his plans spur a wave of protests and strikes backed by the the labor union from April 3 to June 28. Despite the protests, MNCs should expect business as usual.”

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Ryan Connelly on “U.S. Exempts Allies From Steel and Aluminum Tariffs”

“US Trade Representative Lighthizer today said that most countries would be temporarily exempt from steel and aluminum tariffs, including the EU, Korea, Brazil, Argentina, and Brazil. This follows exemptions granted to Canada and Mexico. News reports linked exemptions to an agreement to work with the US in addressing Chinese economic imbalances. Trump is scheduled to speak at 12:30 today on China.”

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Alejandro Valerio on “Peru prosecutors seek to bar toppled president from leaving country”

“Peru’s president, PPK, was forced to resign from office due to corruption scandal. As FSG anticipated in its LATAM Regional Outlook and Peru Market Spotlight, his vice president Martín Vizcarra will replace him likely ending the political uncertainty that has been looming over the biggest copper producer. Markets rallied on PPK’s departure and MNCs should expect pro-growth policies.”

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Mark McNameeMark McNamee on “The government is discussing an increase in the income tax”

“After President Putin’s address to the Federal Assembly recently, it became clear that certain taxes would have to rise in order to pay for his planned increases in fiscal expenditures. Interestingly, an increase in the VAT rate has been less discussed in recent months while increasing the income tax – which would entail a non-taxable minimum – has been considered more seriously lately.”

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