EMIA Week In Review: Unlocking Africa’s Potential, The Rise of Iran’s e-commerce Industry & More

July 4, 2016


Kuwait said to be planning major healthcare reform

Frontier Markets Compendium / July 1st

  • Kuwait wants to revamp its national healthcare system to improve services and cut outbound medical tourism.

  • It has identified healthcare as a key priority in the government’s KD31 billion ($102.9 billion) Kuwait Development Plan (KDP) for 2015-2020.
    It has reportedly now launched a package of reforms intended to cut costs in the sector while improving the quality of service provision.

  • Below-par national healthcare prompts thousands of Kuwaitis to travel abroad for treatment each year.


Unlocking Africa’s Economic Potential

Frontier Markets Compendium / July 1st

  • There are plans to develop world-class port facilities, so that landlocked countries can be connected to global trade routes and help to provide more opportunities for their people.

  • This is the role that Djibouti is determined to play.

  • It is at the centre of world trade routes, connecting Asia, Africa and Europe: port activities and related sectors already account for over 70% of Djibouti’s GDP.

  • They are investing $15 billion more over the next five years to improve facilities and transport links to maximise the benefits of people, the wider region and the global economy.


Bahrain private wealth set to grow to $300bn by 2020

Frontier Markets Compendium / July 1st

  • Private wealth in Bahrain will rise from $0.2 trillion to $0.3 trillion by 2020, according to a new report by The Boston Consulting Group (BCG).

  • In the next five years, the growth of private wealth in Bahrain will be driven primarily by equities (8.4 percent), followed by cash and deposits (4.1 percent) and bonds (3.3 percent).

  • Over the next five years, wealth in the Middle East and Africa region is set to reach $11.8 trillion - and Saudi Arabia, the UAE, and Kuwait's contribution will account for 22.7 percent of that total

  • In terms of wealth distribution in Bahrain, private wealth held by ultra-high-net-worth (UHNW) households (those with above $100 million) is expected to grow by 16.1 percent by 2020.


The rise of Iran’s e-commerce industry

Global Risk Insights / July 1st

  • Two politico-economic decisions have exerted enormous influence on the growth potential of the Iranian e-commerce sector, somewhat mitigating the risk of investing in the industry.

  • First, the introduction of an easily accessible 3G network in Iran has quickly accelerated widespread penetration of the internet.

  • Second, the Rouhani government’s agreement to the Joint Comprehensive Plan of Action (JCPOA) – or nuclear deal – has had an important impact on Iran’s internal business climate.

  • Nevertheless, foreign financiers remain spooked by the difficulty of doing business in Iran.


What is next for Latin America’s middle class?

Global Risk Insights  / July 1st

  • In the first decade of the 21st century, Latin America was characterized by profound social and economic transformations that elevated the region’s middle class.

  • The rise of this new regional middle class can be attributed to two factors: the commodities boom, and government policies aimed at tackling poverty and inequality.

  • On the one hand, the surge in both commodity prices and supply propelled global trade and export revenues.

  • This was particularly important since the region is historically reliant on extractive activities and primary goods.


Argentine economy grows 0.5% in first quarter: fishing and transport compensate fall in agriculture

MercoPress / July 1st

  • Latin America's third largest economy was helped by 7.5% growth in its fishing sector and 4.2% expansion in transport.

  • Construction and agriculture, crucial because the country is a grains-exporting powerhouse, both fell by more than 5%, Indec said.

  • Indec also revised its 2015 growth figure to 2.37% from the 2.1% expansion Macri's government initially reported for last year.

  • President Mauricio Macri has fifteen months to get the economy steaming again since in October 2017, he faces midterm elections, and it could be a chance to ensure a larger support in Congress.


Paraguay does not accept Venezuela as Mercosur pro tempore chair; group split in half

MercoPress / July 1st

  • Paraguayan foreign minister Eladio Loizaga said his country will not accept such presidency.

  • The unilateral announcement is of great concern since it was made public when the Venezuelan government is calling for the dissolution of the elected National Assembly.

  • A Paraguayan diplomat did not want to describe the situation as a 'rupture' of Mercosur, but underlined that “we will never allow that politics prevails over the rule of the law and the charter”.

  • The next summit was scheduled to take place in Montevideo next 12 July, since Uruguay currently holds the rotating chair.


Pacific Alliance summit in Chile convenes seven regional presidents

MercoPress / July 1st

  • The 11th Presidential Summit of the Pacific Alliance took place on Friday in Puerto Varas, southern Chile, and Kuczynski and Macri have been invited to participate.

  • Macri and Kuczynski joined the panel of speakers at the business forum programmed to address education, vision of economic and financial integration in the Pacific Alliance, promotion and facilitation of trade for small- and medium-sized enterprises (SMEs).

  • Launched in 2011, the Pacific Alliance is a regional integration mechanism reuniting Chile, Colombia, Mexico and Peru.

  • It seeks to facilitate the free movement of goods, services, capital and people among member countries.


China-U.S. dialogue falls short on substance

Global Risk Insights / June 29th

  • Both parties faced an incredible task of confronting a range of issues from cyber security and finance, to protectionism and the ongoing South China Sea dispute.

  • While China is opening up a $3 billion green finance fund for U.S. companies, that pledge comes on the heels of a historic collapse in transparency and an increase in regulations for foreign companies.

  • Speaking in Singapore, deputy chief of general staff, Admiral Sun Jianguo, conveyed a not very subtle proclamation that China will not recognize any international ruling against China’s current actions.

  • China-U.S. relations remain at opposite ends of the spectrum when it come to the most highly disputed policy issue between the two nations.


Venezuela: Mired in crisis, with no clear path ahead

Global Risk Insights / June 29th

  • The opposition, led by former presidential candidate Enrique Capriles, is calling for a referendum to recall President Nicolas Maduro.

  • After gathering 1.85 million signatures that support the petition, Capriles has claimed victory and has said a recall vote will take place this year.

  • The opposition claims that Maduro has driven the country towards economic collapse.

  • On the other hand, Maduro has just extended the state of emergency he issued earlier this year as a way to stave off the economic crisis.


Duterte’s new economic agenda: What is old and what is new?

Global Risk Insights / June 29th

  • Carlos Dominguez, the new finance secretary, presented the economic agenda of the newly-elected President of the Philippines, Rodrigo Duterte.

  • It appears to be an attempt to reassure the business community about his commitment to continue a business-friendly economic policy.

  • The new administration will seek to alleviate poverty, take actions to ensure that the Philippines remains attractive to investors, carry out tax reforms to fight corruption, and initiate programs to improve the labour force.

  • The economic agenda looks good on paper, but the business community is waiting to see how the new administration will go ahead with the implementation.


Russia lacks economic clout in tentative pivot to Asia

Global Risk Insights / June 29th

  • Much attention has been given to Russia’s strategic turn, or “pivot” to China in the wake of U.S.-Russia tensions.

  • However, the more consequential picture is one of Moscow’s desire to not become Beijing’s junior partner due to the latter’s economic power.

  • Historically, Russia has threatened to turn eastward only whenever its relations with the West became strained.

  • Because of these factors, Russia faces both internal and external pressure to demonstrate that its Asian pivot is indeed genuine.


Logging into China’s E-Commerce Market: Nationwide Access Announced for Foreign Investors

Asia Briefing / June 29th

  • Foreign investment in China’s lucrative e-commerce market has again been expanded by China’s Ministry of Industry and Information Technology (MIIT).

  • Complete foreign ownership of e-commerce enterprises, previously accessible only to companies within the Free Trade Zones, is now permitted across the whole of China.

  • As of Friday, June 19th, 2015, WFOEs involved in online data and transaction processing may own up to 100 percent of company shares.

  • MIIT’s new policy broadly expands foreign investor power, as the previous shareholder cap for foreign investors in e-commerce was limited to 50 percent.


Saudi GDP growth forecast to hit 14-year low in 2016

Frontier Markets Compendium / June 29th

  • Saudi Arabia's GDP growth is expected to rise by just 0.8 percent this year, its weakest growth since 2002 as the cumulative impact of government spending cuts and low oil prices feed through to the economy, a new report has said.

  • The report said the UAE is expected to see growth of 2.3 percent in 2016, reflecting the low oil price outlook and relatively large fiscal deficit.

  • It added that substantial fiscal austerity is underway with an emphasis on cutting subsidies, control of the government wage bill and increased non-oil revenues while GDP is expected to rise 1.3 percent in 2016.

  • GDP is forecast to rise 4 percent this year in Qatar, supported by strong non-hydrocarbon activity, up an expected 7 percent in 2016 while Kuwait's economy is expected to expand 2.3 percent as the government pushes ahead with further fiscal adjustments, the report added.

East Africa: Kenya, Ethiopia in Rail, Pipeline Deals

Frontier Markets Compendium / June 29th

  • Kenya is seeking Ethiopia's participation in regional infrastructure projects after Uganda and Rwanda pulled out of the joint oil pipeline and the standard gauge railway.

  • In a bid to stem its increasing isolation in the region, President Uhuru Kenyatta invited Ethiopian Prime Minister Hailemariam Desalegn for a three-day official visit last week.

  • The visit saw the two countries agree to fast-track the construction of an oil pipeline from Lamu Port to Addis Ababa by the end of 2016, as well as a Joint Railway Commission that links the two countries.

  • Ethiopia now provides the much desirable fall back position after Uganda first pulled out of the joint crude oil pipeline to Lamu in favour of the Tanga Port in Tanzania, while Rwanda said it was weighing its options on a rail link to either the ports of Tanzania or Kenya.

Tags: africa, argentina, china, commerce, e-commerce, economy, gdp, growth, iran, oil & gas, political, relations, risk, russia, statistics, trade, us
Posted in Global, Macro Economics, Macro Economics