Country risk March 2003: Asian recovery belies slack global growth

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GDP GROWTH IN east Asia exceeded expectations in 2002, averaging about 6.1%. "There are real signs of recovery in the region since the Asian financial crisis," says Linda Yueh, lecturer in economics at the London School of Economics. "Net private lending to the affected countries is positive for the first time since 1997. Excluding China (56) from the region's calculations reduces the region's rate of growth to closer to 5% for the past year. With the sober external environment and the global economic slowdown, recovery in the region will likely continue but at a moderate rate."

By contrast, there have been seismic changes in Latin America's risk levels and perceptions. "Argentina has fallen into an expected crisis, but with a magnitude that will make any significant rebound and exit from acute difficulties much more complex and probably unstable," says Thierry Apoteker, managing director, TAC Financial. "Differentiation between countries has increased, with Mexico slowly making the gap to reach a Chilean-type of country risk. Brazil (79) looks increasingly a potential candidate for a parallel move. Country risk has decisively moved away from pure financial and debt considerations, towards more explicit political issues, such as the stability of the Chávez government in Venezuela."