Articles List

Articles List

GCC: A Decade Of Diversification Ahead

Economic growth in the Gulf Cooperation Council will slow over the coming decade as weaker oil prices and marginal gains in oil output weigh on the all-important hydrocarbons sector. Further gains will be driven by the non-oil private sector, and we expect a shift in the shape of growth towards private consumption and away from the export-driven model that has been in place since 2000. In addition, we expect diversification efforts to gather pace, partly due to fiscal pressure. Saudi Arabia and Oman are best placed in this regard, while Kuwait will remain behind.

Scandal To Increase Corruption Fears

The arrest of Albania's central bank governor will cast doubts over the country's progress in tackling corruption, thereby undermining the country's attractiveness as a business proposition.

Ethanol Sector Will Benefit From Silva Win

The Brazilian ethanol sector would benefit from a win by Partido Socialista Brasileiro candidate Marina Silva in the country's upcoming presidential election. If Silva were to win and implement her proposed reforms, Brazilian ethanol production would become more competitive both domestically and for export.

Robust Project Pipeline Underlines Positive Forecast

We maintain our construction industry real growth forecast for Egypt at 4.5% in FY2014 and 5.3% in FY2015 on the back of a strong project pipeline, robust demand for infrastructure, and increased political stability.

RBI To Continue Monitoring Inflation

India's headline consumer price inflation (CPI) eased in August, coming in at 7.8% year-on-year (y-o-y), from July's print of 8.0%, largely owing to a fall in core CPI. Despite the fall in headline CPI, we forecast that the Reserve Bank of India (RBI) will keep its repo rate on hold at 8.00% during its next policy meeting on September 30 as we expect the central bank to maintain its commitment to ensure medium-term price stability in the country. That said, we forecast that the RBI will cut its benchmark interest rate by 25 basis points (bps) to 7.75% by Q4FY2014/15 (April-March) on the back of easing inflationary pressures over the coming months, which will provide room for them to reignite sluggish credit growth.

Price Pressures For Biosimilars To Rise

Governments in Western Europe are to remain committed to fiscal consolidation and will continue to target the healthcare sector and the prescription drugs sector in particular - a large recipient of government funds. Therefore, despite calls made by regulatory bodies for the implementation of a system that adequately rewards innovation and supports investment in future medicines, including biologics, companies will face an increasingly tough pricing and reimbursement environment.

Construction Rebound Coming, But Unsustainable Long Term

Brazil's construction sector remains poised for a rebound over the next couple of years. Although we now expect Brazil construction sector to have entered a recession in 2014, the size of the project pipeline should precipitate a rebound in activity in 2015. Over the five- to ten-year time horizon however, we remain concerned over the sustainability of growth given the poor foundation for investment. Thus we are maintaining our outlook that a revival in growth over the next couple of years will be followed by a sharp slowdown.

Balance Of Payments Crisis Risks Rising

Falling oil prices, restricted access to Western capital and lack of reform are pushing Russia towards a balance of payments crisis. A near-term crisis will probably be averted as tensions with the West ease over the next few quarters, but the damage done to investor perceptions of Russian stability will be lasting.

Economic Headwinds To Weigh On Car Sales

Given our downbeat outlook on China's economy, we expect the slowdown seen in the passenger car segment to persist over the coming quarters. As such, we maintain our 2014 and 2015 passenger car sales growth forecast of 10.2% and 8.0% respectively, with luxury cars and SUVs remaining bright spots within the segment.

Regional Growth Will Increase Bottlenecks At Ports

Bottlenecks at major Latin American ports will increase in the medium term as the region is unprepared to deal with the increase in throughput - the result of strong population and private consumption growth which, in turn, will feed demand for imports.

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