Each week FrontierView’s global research team shares their view on key media stories, and what the implications are for your business.
Ashu Agarwal on “Spending Spree Planned as Budget Delay Risks Philippines Growth”
“The government is developing an accelerated disbursement plan for the rest of the year as the delay in the passage of the 2019 budget likely resulted in a significant decline in spending between January and April. MNCs can expect new infrastructure projects to kick off after the midterm election; however, annual capital expenditure is still likely to be well below the allocated budget for 2019.”
Ramiro Sugranes on “Venezuela Opposition Seeks Traction on Day Two of Uprising”
“Our key scenario is for Venezuela to remain in play following recent events, as outlined in our rapid response and this week’s edition of The Lens. Internal and external pressures have not led to major military defections, reinforcing our base case view that Nicolás Maduro clings to power. Yet, MNCs should closely track our signposts to gauge if other scenarios, including a transition, may materialize”
Mark McNamee on “Russia Warns U.S. Over ‘Aggressive’ Moves in Venezuela”
“Firms should monitor the situation in Venezuela in the coming days and its impact on sanctions against Russia. Therefore, if the US is going to finally implement another round of sanctions against Russia, as has been threatened since late 2018, this dispute with Russia over the future of Venezuela could very well be the inspiration. In response, the ruble would likely weaken by about 5%.”
Matthew Kindinger on “Nigeria’s Senate Hikes 2019 Budget $29 bln With Focus on Security”
“Nigeria’s senate has approved the government’s 2019 budget after raising it by N80 billion (US$222 million) to N8.91 trillion (US$24.75 billion). However, MNCs should not anticipate stronger B2G opportunities – the additional funds will be mostly allocated to the military because of escalating insecurity across rural areas. The budget requires president Buhari’s approval before it is implemented.”
Alex Schober on “Argentina’s Economic Activity Contracts 4.8% in February, Resulting in 10 Straight Months of Decline”
“Argentina’s economy fell 4.8% YOY in February, dragged down by retail and wholesale commerce (-12.3%). This is in line with our view that growth in Q1 would be strongly negative. However, in light of higher inflation, we revised down our real GDP forecast to -1.7% in 2019. Customer demand will only recover in Q4, and it will be lighter than we originally envisioned.”
Alejandro Valerio on “Mexican Economy Contracted in First Quarter”
“Economic growth in Mexico will decelerate in 2019. This is due to low investment, weak consumption, government spending austerity, and uncertainty about the government’s policy implementation. Q1 readings have confirmed economic deceleration, at 1.3% YOY, and a decline of consumer confidence for the first time since the eve of AMLO’s landslide victory.”
William Attwell on “The Man Who Would Remake South Africa”
“While a win by the ruling ANC in South Africa’s May 8 election is not in doubt, much will hinge on the scale of the victory. Therefore, if President Cyril Ramaphosa can reverse the trend of declining voter support, he may gain enough political clout to push through economic reforms against the wishes of the ANC’s populist wing. For MNCs, this could portend improved business conditions in the years ahead.”
Ryan Connelly on “U.S. Hiring Jumped in April; Unemployment Falls to 3.6%”
“Another stronger-than-expected data release in the most important category for the US economic outlook, the US added more jobs than expected in April. Nominal wage growth continues at a solid clip. However, it should accelerate over the summer as labor markets tighten further and seasonal demand for construction picks up. Firms will continue to poach high-skill and low-skill workers from competitors.”