If there is one thing that has been consistent throughout history, it is the volatility of markets. Historically, the successes and failures of markets and economies have always depended on global events and headlines. Two months after 2018, there are worries about what the global market will look like in the next 10 months. And again, there is the Frontier Strategy Group (FSG) was published emerging market risks that leaders and industries need to pay attention to.
In 2017, the FSG observed that executives and boards around the world are paying more attention to global headlines, especially the North Korean riots, the Trump administration, Brexit, and even cybersecurity. However, even local developments in emerging markets have been relatively ignored. This should not be the case, as top management must take all into account emerging market risks because they can significantly change the global playing field. Needless to say, external risks, such as the global market, need as much attention as internal and competitive risks in emergency planning.
For 2018, the FSG has evaluated more than a hundred scenarios from 73 different countries that could disrupt the economic forecast for the year. These developments have reduced other emerging market risks that require more attention from top management at the multinational level, as they could disrupt exchange rate conditions, supply chains, and even market strategies. These are:
Latin America: The potential choice of populists in Mexico and Brazil could backfire
Latin America’s GDP growth rate may rise again to 2.7 percent, but there are still many job-related risks. Mexico and Brazil account for an astonishing 60 percent of the Latin American region’s GDP, while also having the most transnational corporations. Both are due to run in this year’s presidential election, a worrying expense because of their support for populist-nationalist candidates that could destabilize both countries’ financial markets and even undermine investor confidence.
In Mexico, left-wing presidential candidate Andrés Manuel Lopez Obrador is leading the election with a platform that promises reverse reforms in various sectors, including the energy industry, which could increase the value of local production and undermine long-term confidence. Business. Brazil has a really growing economy, despite political scandals in the left, right and center. However, former President Luiz Inácio Lula da Silva, despite being convicted of corruption, hopes to return to office this year, and promises to repeal budgets and reforms to the country’s pension system could cause uncertainty for the country’s business community.
Europe, the Middle East and Africa: The Migrant and Refugee Crisis
Conflicts in the Middle East and Africa have created a disputed flow of migrants to Europe for several years. All over Europe, we have seen anti-immigrant movements exaggerate in the political arena and favor right-wing populists.
Although the European Union is in a dilemma when it pledges $ 6 billion in aid to Turkey, mainly for 3.6 million asylum seekers and refugees from Syria, the weak deal is under threat as the Turkish government seeks to strengthen its power. and European governments are trying to find a common ground on which they can create comprehensive economic reforms in the regions by adhering to human rights standards.
Asia-Pacific: China bends naval and military muscles over its neighbors to seize more trade routes
While the rest of the world focused on the North Korean unrest, China was also involved. In 2017 alone, the United States built military facilities on the disputed islands of Spratly and Paracel South China SeaIt was also claimed by the Philippines, Malaysia, Vietnam and Taiwan. This structure is a difficult freedom of navigation used by many in the Western world, especially the United States. When military expansion takes place in full swing, there is a different probability of involuntary or other confrontation, which leads to a catastrophic disruption of trade.
This will force multinational companies to re-evaluate their resilience in Asia, especially in sensitive countries around the South China Sea, in terms of manpower, supply chain and distribution. This, in turn, could hurt the emerging Asian economy.