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Sovereign wealth funds on euromoney.com

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March 2000

Country risk March 2000: Commodity prices boost emerging markets


The last six months have seen a marked turnaround for the world economy. A year ago the larger emerging-market countries were falling in the rankings as investors lost confidence in Brazil, Russia and other crisis-ridden giants. This year favourable commodity prices, better risk management and buoyant developed country economies point to better times ahead. There are some big winners in the latest Euromoney country risk ranking. Research by Andrew Newby.




COUNTRY RISK RANKINGS
1-50
51-100
101-150
151-180 

GLOBAL ECONOMIC PROJECTIONS
1-50
51-100
101-150
151-171 


The global economy is in good shape. Big gains in this year's first Euromoney country risk survey are made by sub-Saharan Africa, most oil-producing countries and also northern European countries. Robust commodity prices lift Madagascar and Tanzania by 44 and 34 places respectively. The benefits of higher commodity revenues are widespread: 29 of the top 50 biggest climbers in the latest survey are African.

As presidential elections approach, Russia rises 20 places thanks to recovering oil prices, the impact of the rouble devaluation on imports, and progress in the London club talks on restructuring of its commercial bank debts.

Scandinavian countries also score well in the survey and are showing very healthy growth and low inflation. Central Europe disappoints but may yet have a good year ahead if the western European economy maintains its strong growth rate and increases imports from the region. Poland drops back one place to 43rd position on worries about its current account deficit. Analysts are more bullish about the Czech Republic with average predicted growth for this year revised up from 1.5% to 1.8%. Romania falls 12 places to 107th position on expectations of only modest growth and doubts about the strength of commitment to fiscal discipline in an election year.

In Asia, recovery is very much export-led, as the region continues to benefit from strong US demand, despite the reducing relative strength of the dollar. Growth projections have been adjusted upwards since September for South Korea, Hong Kong, Thailand and Malaysia. Malaysia climbs 10 places for economic performance after a rise of 28 places in last September's country risk survey.

Japan suffered a technical recession in the last half of 1999 and falls three places in the overall risk categories. Despite this, Japanese growth forecasts for this year average 1.1% , up from 0.5% in September.

China rises two places to 48 and analysts are less cautious in their GNP forecasts, with an average of 7% predicted for next year compared with consensus estimates of 6.5% in September. Foreign direct investment and consumption remain sluggish following the country's accession to the WTO, as investors adopt a wait-and-see approach.

Latin America is emerging from recession, again helped by strong oil prices. Brazil has seen good GDP growth, assisted by strong capital inflows and lower interest rates. Growth forecasts for both Brazil and Argentina reflect optimism about the progress of fiscal reform in both countries. Surprisingly, Mexico falls a place in the overall rankings despite having perhaps the most positive prospects of any country in the region. Strong links to the US and oil-prices at a 10-year high have helped shield the economy from the worst effects of the recession in Latin America.

The members of the Andean group have their own troubles - Ecuador's recent debt default is reflected in a 42-place fall in its ranking, Peru falls 18 places.

Elsewhere, Iran climbs 19 places with its political score improved by expectations that conservatives will lose their majority in parliamentary elections being held this month.

Poor scores for the Pacific states - Tonga, Vanuatu, Samoa and the Solomon Islands - reflect lack of data on economic projections rather any adverse change in recorded economic performance or political outlook.




Country risk: Numbers 1-50

Country risk: Numbers 51-100

Country risk: Numbers 101-150

Country risk: Numbers 151-180

Global economic projections: Numbers 1-50

Global economic projections: Numbers 51-100

Global economic projections: Numbers 101-150

Global economic projections: Numbers 151-171

More information on country risk


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