What Our Analysts Are Reading – 5/4/2018

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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.

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Pratima SinghPratima Singh on “India Joins World’s Top Five Defense Spenders, Surpassing France”

“Despite higher military spend, India’s defense expenditure remains concentrated on salaries and pensions rather than on modernizing machinery. Military pensions are now greater than the country’s entire defense capital budget. If Indian authorities want the country’s military to reflect its growing economic might, they will need to shift expenditure from manpower to creating productive assets.

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William Attwell on “​Zimbabwe opposition leader wants to give China investors the boot

“The opposition leader accuses China of “asset-stripping” Zimbabwe’s resources and has threatened to expel some Chinese firms. However, the raw fact is that Zimbabwe needs Chinese investment to rebuild its economy. Regardless of who wins the July vote, Western MNCs will continue to face competition from Chinese players.

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Danyi Yang

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Ryan Connelly on “Fed Holds Rates Steady, Sees Strong Growth in Hiring and Investment”

“As expected, the Fed met today and did not increase interest rates. However, it remains on-track to raise rates at its June meeting. The Fed noted in its minutes that market measures of inflation – most likely Treasury Inflation-Protected Securities – remain below levels consistent with its inflation mandate. This allows the Fed to maintain an accomodative stance.”

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Alex Schober on “Argentine peso hits new low despite emergency rate hike “

“The Central Bank of Argentina (CBRA) still has the foreign exchange reserves to slow down the depreciation of the Argentine peso (ARS). However, MNCs should expect the average rate of depreciation over the course of the year to be higher than inflation, making it more difficult for importers to pass on prices to final consumers in the form of raising prices in line with inflation.”

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Dalia Naguib on “Economics of Ramadan: GDP declines, spending increases”

“MNCs in the retail and hospitality sectors should ensure their MENA teams are prepared to capture an increase in consumer spending during Ramadan. In contrast, MNCs in other sectors may experience a slowdown during Ramadan because of the decrease in productivity from shorter working hours.”

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