Brazil's food industry will see robust growth over 2016, largely driven by inflation; however, it will contract in real terms. As consumers become increasingly price conscious, we expect staples to do well, particularly pasta products, while non-essential food items will see a contraction. Premium product categories will be the hardest hit as consumers reduce discretionary spending.
Despite a noticeable boost to export growth, Tunisia will continue to rely heavily on pharmaceutical imports to meet its domestic demands. We expect multinational drugmakers' interest to continue to grow as the country is strategically placed, being in close proximity to both European and African markets. Furthermore, the business landscape provides an attractive investment proposition for foreign drugmakers in the form of low levels of bureaucracy and government support. However, regional instabilities and the rising threat of terrorist attacks present huge operational risks that will discourage multinational companies to develop a direct local presence. As such, most multinationals will continue to exert an indirect presence - the majority export their products to Tunisia. Therefore, despite export growth showing promising signs, over the medium term at least we expect that Tunisia will continue to rely on imports for the majority of its pharmaceutical needs.
GSK's management will need to convince shareholders that its current operational structure - a business that has a not insignificant focus on consumer healthcare products, which some investors deem is at the expense of higher-margin pharmaceuticals - will result in improved long-term revenue earning prospects for the company. GSK suffered a steep fall in profits in 2015 and there was no let up in the decline during the fourth quarter, but CEO Andrew Witty said the UK drugmaker was on course for recovery this year.
The cyberattack on a Ukrainian power station in late December 2015 signals a growing risk of cybercrime causing disruption to logistics networks around the world. While Ukraine remains a soft target for cybercrime, the success of the attack nonetheless indicates that even countries and businesses with strong cybersecurity measures in place should step up their defences.
Despite recent data indicating that services sector growth remains strong, the UK economy looks more vulnerable this year. Although the Bank of England is unlikely to follow the BoJ and the ECB and loosen policy further, a rate hike by the end of Q216 looks increasingly unlikely as global oil prices plumbs new depths and the strength of the UK's recovery remains under scrutiny.
Pfizer's near term future will be defined by incorporating Hospira, its upcoming combination with Allergan, and a potential split into two entities, all the while commercialising current products and delivering innovative products though its pipeline. There is still an outside risk of the US Treasury derailing the Allergan deal, and this would be highly disruptive to Pfizer's strategic goals.
Increasing interest from foreign investors and further government support will boost the capacity of Ethiopia's domestic pharmaceutical industry over the long-term. The government's 10-year plans are yielding positive results in achieving self-sufficiency; however, we uphold our view that many of their targets are overly ambitious. Despite improvements to the country's domestic capabilities and export growth, Ethiopia will remain reliant on importing the majority of its pharmaceuticals.
Russia will remove its retaliatory import ban on Western products during H216 after the EU removes the sanctions it imposed on Russia. The ban removal will reinforce disinflationary trends in Russia over H216 and lead to lower growth in the Russian and Belarusian agricultural sectors. The removal will be significantly positive for some EU member states (mainly Finland, the Baltic countries and Poland) and will help to reduce the current supply glut on the global dairy market.