Chinese firms face changing competition in Myanmar

Significance Myanmar's new government needs foreign investment to pay for development, creating fresh opportunities for China. However, attitudes to foreign investment within Myanmar's government and populace are shifting. Impacts Myanmar's ethnic Chinese population, perhaps currently numbering 2.5 million, will grow. Medium term, securing the energy pipelines traversing Myanmar will be a linchpin for China's regional economic diplomacy. Protests against large-scale Chinese projects could diminish the NLD's hold on local socio-environmental activists' loyalty.

Significance The audit and wider structural economic reforms are preconditions for urgently needed foreign aid. Economic conditions in Lebanon are still worsening, with power cuts, food shortages and rising poverty. Impacts A new government would allow reform planning to resume and temporarily stall the decline of the currency. The easing of the global pandemic will somewhat reduce the financial strain, as Lebanon reopens its economy. Soaring poverty rates could provoke large-scale ‘bread riots’ in the coming months. Further devaluation of the currency will make poor Lebanese more dependent on sectarian protection and strengthen patronage. If the situation worsens, sectarian rural areas could revert to warlordism in the medium term.


Significance The most serious challenger to President Alassane Ouattara's re-election, N'Guessan's candidacy probably marks the end of election boycotts by FPI, but rifts linger from the 2010-11 civil war. Impacts Large-scale infrastructure investments will facilitate medium-term economic growth, despite possible volatility around the election. Foreign investors are likely to refrain from making major decisions before the poll but inflows will pick up in 2016. High user fees for the new Henri Konan Bedie toll bridge in Abidjan will probably reduce congestion by commuters. High global cocoa prices and robust output (Ivory Coast is the world's largest producer) will buoy government revenues.


Significance The ruling party’s landslide promises Hungary more of the same. However, a degree of uncertainty lingers in the short-to-medium term. The party has structural weaknesses, but to exploit them, the opposition needs unity and a more articulate vision. Impacts After such a crippling defeat, large-scale opposition reorganisation is inevitable. Central Europe's Eurosceptic populist bloc will strengthen, accelerating moves towards an EU of various integration ‘circles’. Russia’s and China’s economic and political influence in Europe will remain stable, with Hungary committed to friendship with both.


Subject Management of South Sudan's economy Significance A framework peace agreement reached in Khartoum on June 27 comprised only five substantive articles; it was therefore striking that one focused on re-starting oil production. The potential -- and the desire -- for economic recovery are real, but turning potential into actual development and growth will require more than just getting the oil flowing again. Impacts Attempts to strengthen oilfield security in Unity State could trigger new fighting. Unity’s oilfields could potentially add 70,000 barrels per day by the end of 2019. Foreign investment inflows will remain minimal in the short-to-medium term.


Significance The programme expands existing purchases of asset-backed securities and covered bonds with large-scale buying of bonds issued by euro-area governments, agencies and European institutions. Purchases will amount to a combined total of 60 billion euros (69 billion dollars) per month, starting in March. They will continue until at least September 2016 -- or until there is progress towards the central bank's medium-term inflation goal. Impacts The larger than expected size of the programme will be achievable thanks to partial risk sharing among national central banks. Wealth effects will be smaller than in the United States and United Kingdom, as euro-area capital markets are less deep. The QE programme will amount to 12% of euro-area GDP, while the US programme was larger, at 25% of GDP.


Subject Early signs of recovery and consolidation in Ukraine's banking sector. Significance For Ukraine's banking sector, the effects of the economic crisis since early 2014 include dramatic currency devaluation, the undermining of public trust and numerous bankruptcies. The crisis has also had positive effects as the National Bank of Ukraine (NBU) set about purging the sector of weak, poorly run institutions. Impacts Capital requirements will cause significant consolidation in the near-to-medium term, as many smaller banks will be unable to comply. By failing to resume large-scale lending to the real sector, the banks will limit the chances of a quick recovery. Russian-owned banks are not immediately threatened by official sanctions, owing to the hefty deposit base they have developed.


Subject The mining outlook in Ecuador. Significance The collapse of world oil prices has forced the government of President Rafael Correa to search for new sources of public revenue and foreign investment. The mining sector, which remains underdeveloped, has the potential to make significant contributions on both of these fronts. Reflecting the growing importance of the sector, the government has a created a Mining Ministry and appointed a mining minister. While numerous challenges continue to face the industry, it has shown signs of increased activity in the opening six months of the year. Impacts Opponents of mining development will attempt to impede medium and large-scale projects, through the courts and on the streets. Changes to water laws and policies will face opposition due to fears they may facilitate mine development and threaten water supplies. While investment in the mining sector will boost economic activity, the economy will expand more slowly than expected in 2015.


Significance Defeated candidate Salvador Nasralla, who was leading for much of the count, has refused to concede, alleging fraud. With protesters already on the streets, the tight election outcome threatens to spark a major political crisis. Impacts Political volatility may lead to a resurgence in violent crime, after the murder rate declined in recent years. Unrest may have knock-on effects in Guatemala, where President Jimmy Morales faces anti-corruption protests. Corruption concerns, social unrest and reputational risk could weigh on foreign investment in the medium term.


Subject Bolivian gas exports. Significance With negotiations under way with Argentina over gas supplies and pricing, Bolivia is seeking to sustain gas exports over the medium term both to this country and to Brazil. These are Bolivia’s only foreign markets for natural gas and between them are its main source of export earnings and fiscal revenue. The gas industry is also a key sector for foreign investment. Impacts Sales of gas to Chile are likely to be blocked because of Bolivia’s dispute over its outlet to the Pacific. Bolivia’s relations with Brazil are likely to become more problematic because of the election of Jair Bolsonaro as Brazilian president. Morales may win re-election next year, but reduced export revenue would eventually weigh on public spending and with that, his popularity.


Significance In 2020, China’s trade sanctions cost the Australian economy AUD19bn (USD14.5bn), with coal exports hit particularly hard. Iron ore exports have largely escaped sanctions so far, as China’s steel sector remains dependent on Australian shipments, but diversification efforts are becoming more important. Impacts Australia’s Foreign Investment Review Board has proved itself willing to block mining investments by Chinese firms. Chinese companies aim to reduce dependence on Australian iron ore through investments elsewhere, notably in West Africa. Mining giant Fortescue is working on a business model for supplying liquid hydrogen to Japan.


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