What Our Analysts Are Reading – 7/6/2018

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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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Alex Schober on “In a Corruption Battle in Honduras, the Elites Hit Back

“Intensifying distrust in politicians will likely continue to negatively impact business and consumer sentiment in most Central American countries, resulting in volatile customer demand. Multinationals should not count out the possibility of major social unrest in Central America (especially Guatemala and Honduras, along with unrest already present in Nicaragua) as a result of corruption cover-up.

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Martin Belchev on “​Business organizations: multiple law changes put Romania on a downward trajectory

“Recent changes to the Romanian criminal code essentially decriminalized certain abuse of office offences. The same applies to public bribery if the accused has not benefited personally. These changes will not only spark a public backlash but will worsen significantly the business environment and investment appetite. Business associations also warned that these will cause increased borrowing costs.

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Pablo Gonzalez

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Athanasia Kokkinogeni on “Trump auto, car tariffs: Automakers Ford, BMW, GM, Toyota, Kia blast plan”

“MNCs with clients in the automotive sector should carefully review the business and supply chain impact of a US tariff hike on EU-imported cars. Trump is exploring the idea of increasing the tariff imposed on EU-manufactured cars exported to the US. This measure will trigger counter tariffs from the EU. Collectively the higher tariffs will weigh on the profitability of EU and US car manufacturers.

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Pratima SinghPratima Singh on “Modi Keeps Pledge to Boost Crop Prices in Bid to Woo Farmers

“The Modi administration announced higher minimum support prices (MSPs) for several crops to increase popularity with rural voters. The increase is in line with expectations and was accounted for in the government budget, which reduces its negative impact on the budget deficit. Executives can expect rural spending to improve. However, higher MSPs will likely stoke already increasing inflation.

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William Attwell on “Kenyan government suppliers go unpaid as corruption depletes state coffers

“B2G customers’ failure to pay suppliers and contractors on time is a perennial risk in many markets across SSA. In Kenya, President Uhuru Kenyatta is enacting reforms to clean up the procurement system, meaning the situation should improve over time. MNCs and their partners should nevertheless ensure they have adequate cover to cope with B2G payment issues.”

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