Each week FrontierView’s global research team shares their view on key media stories, and what the implications are for your business.
Athanasia Kokkinogeni on “May in tears as she says she will step down on 7 June”
“Amid mounting pressure, PM May named her departure date today, after deadlock in delivering Brexit. On June 7, May will step down from UK PM and Conservative leader, and the party leadership race will begin. Dominic Raab is the favorite to replace May, a prominent Leave campaigner. As a result, the fresh developments translate into acute and prolonged economic and business uncertainty and a weaker 2019 pound.”
William Attwell on “South Africa’s central bank leaves repo rate unchanged at 6.75%”
“Recent inflation data indicating that prices rose by a stable 4.4% YOY in April inform the central bank’s decision to retain its benchmark rate. MNCs should not expect a cut and resulting rise in credit growth, however. Fresh inflationary pressures due to fuel and power price rises will cause prices to accelerate in the coming months. Expect this to make monetary policy easing unlikely.”
Ashu Agarwal on “Protests of Indonesian Election Results Turn Deadly”
“Indonesia saw deadly protests following the release of election results earlier this week. Riots have resulted in an exodus of capital from Indonesian stocks and a decline in the rupiah to a five-month low. However, any political uncertainty and security risks are expected to be short term and are unlikely to have any significant long-term impact on direct investment, both foreign and domestic.”
Alex Schober on “Argentina March economic activity down 6.8%”
“Argentina’s economy contracted 6.8% YOY and 1.3% MOM in March. This was the worst result of 2019, but expected given the extremely high inflation reading from that month. We don’t expect an annualized recovery in Argentina until Q3 at the earliest. Monitoring the Argentine peso and its effects on the disinflation process will be key to a real economic recovery during that time frame.”
Athanasia Kokkinogeni on “U.K. Pound Falls Against Dollar, Euro as May’s Brexit Plan Falters”
“Recent Brexit developments confirm our 2019 assumptions, and we maintain our scenario likelihoods. This week, PM May offered a revised Brexit plan, including parliamentary votes on a second referendum and different customs options, as well as legally binding backstop changes. Her plan is not different from the original, but she explores ways to gather support ahead of the meaningful vote in June.”
Ashu Agarwal on “Duterte loyalists fill up Senate after midterm vote”
“Duterte-backed candidates have obtained 9 of the 12 available seats in the Philippines’ senate elections held on May 13. As a result, Duterte now commands both the upper and louse chambers of Congress. This will make it easier for Duterte to pass future government spending plans and key economic reforms including the proposed reductions in corporate income tax and corporate tax incentives.”
Mark McNamee on “US Congress eyes sanctions on Russia’s Nord Stream 2 pipeline”
“Trump repeatedly dismissed several sanctions bills, initially destined to be enacted in Q4 2018. These most recent sanctions would not directly target the Russian economy, and therefore would not fundamentally impact demand in the market, and will likely be delayed until Trump sees Russia as failing to act as a partner with US interests in Iran, Venezuela, and other areas.”
Alex Schober on “A first quarter to forget: The Chilean economy grew less than expected after a strong slowdown from mining”
“Chile’s economy grew by 1.6% YOY in Q1, led by investment (2.9%) and private consumption (3.2%). Mining activity contracted 3.6%, mostly due to heavy rains in the north which interrupted important mining operations. We maintain that Chile’s real GDP will grow 3.2% this year, but will continue monitoring reform progress and the US-China trade war’s impact on copper prices.”