Tag_business-Smart Devices

Western Europe Business in 2023

2022-12-02

High-likelihood risks will require greater focus on scenario planning through 2023–2024 Western Europe is set to see acute risks throughout 2023, stemming from both strong macroeconomic headwinds and rising political uncertainty. While these risks are not part of FrontierView's base case for the region, they highlight the need for greater focus on scenario planning in the medium-to-long term, especially because of their considerable impact on markets’ potential performance. Additionally, they underline the difficult operational environment that multinationals are set to experience in terms of both demand opportunities and operational costs. Government-mandated gas rationing in the EU (35%): While warm weather and high gas inventories will likely soften the need for European governments to implement strict rationing measures in the winter of 2022, ongoing supply issues and low LNG import capacity will continue to present significant issues during the winter of 2023. Additional risks to supply, such as disruptions to US exports or suspension of Russian LNG supplies, may prompt a period of acute gas shortages, which will require a much more considerable government involvement in energy consumption and result in rationing that prioritizes households and essential services throughout 2023. Spain's far right enters government (30%): The center-right People's Party (PP) is currently ahead in polls but isn’t projected to win enough votes to form a majority government. With the cost-of-living crisis forecast to continue into next spring, angry voters could vent their frustration by voting for Vox, a far-right party. If Vox secured a sufficiently large proportion of the vote, the PP could be forced to form a coalition with it, as happened on a regional level this year. However, Vox's nationalist stance could inflame tensions with Catalonia, one of Spain's wealthiest regions, boosting support for the separatist movement. In this scenario, heightened uncertainty would raise borrowing costs and weaken business...

Doing Business to Latin America in 2023

2022-12-01

LATAM could once again emerge as the clear winner among emerging markets in 2023 As companies operating in LATAM build contingencies into their 2023 plans, they should continue to weigh global disruptors much more heavily vis-à-vis domestic factors, whether the former stem from a much-faster-than-expected Chinese slowdown, escalation of the war in Ukraine, or disruption to key commodities’ production and supply. When it comes to disruption that could originate in LATAM or be directed at LATAM, our bias is to the upside for the first time in many years. The region already grew faster than expected in 2022, and we have reasons to believe that LATAM could emerge as a clear winner among emerging markets again in 2023. All downside risks are actually self-inflicted political transitions or result from poor policy decisions. The following are the most important events to monitor in LATAM: Brazil removes all fiscal anchors: Our base is that Brazil will relax its current fiscal framework to allow for more government spending, but that new rules will still limit how much spending can increase in a given year. Our downside scenario would be that Lula's government manages to break free from any spending cap. This would lead to a much weaker currency and push Brazil closer to a debt crisis down the line, leading to sharper budget cuts and tax increases already during Lula's term. LATAM concentrates emerging-market (EM) investment: With both the US and Europe careening toward a recession in 2023, potential escalation of the war in Ukraine affecting neighboring countries, China remaining in lockdown, the MENA region suffering from high-inflation and heightened FX volatility, and Russia written off in global investment portfolios, suddenly LATAM feels like a safer investment bet. In this scenario, LATAM could become the top FDI destination, only trailing the US, Europe,...