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EM performance under serious security threat – TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 14, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Cristian Maggio, Research Analyst at TDS, notes that we have started off the European session on the news that several blasts and street shootings have rocked Jakarta earlier today.

    Key Quotes

    “The dynamic and targets of the strikes are compatible with an ISIS-related action, similar to those recently witnessed in Paris, Tunisia and Turkey.

    Clearly this is not how we would have liked to open our EM musings today, but must admit that terrorism and other security issues have forcefully become a topic and a variable that we should ac-count for when drafting our EM outlooks. Numerous countries, especially but not exclusively those with large Muslim populations, have become targets of international terrorism.

    While it’s difficult to estimate its impact, security concerns will have measurable effects over time. Tourism in particular is likely to suffer as the perception of safety is dented in countries that are considered to be targets or where attacks have already taken place. This means worse current account deficits vis-à-vis the levels we would have otherwise seen.

    Business and consumer confidence are likely to be casualties of this low-intensity conflict that is taking place on a global scale and that will eventually limit economic growth.”
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