Economic projections methodology
Euromoney received replies from 32 economists at leading financial and economic institutions. They gave each country's economic performance for 1999 and 2000 a score out of 100. The world's fastest-growing, best-performing economy in an ideal year would score 100; the worst economy in a disastrous year would score zero. Respondents were asked to consider economic growth, monetary stability, current-account balance, budget balance, unemployment and structural imbalances. Economists also gave GNP growth forecasts for 1999 and 2000. Countries which received no votes are excluded from this table.
Our thanks go to the 45 political analysts and economists who took part in our surveys. Those who did not wish to remain anonymous were:
S Patel, Afrinvest; S Mok, Bank of East Asia; CY Tan, Bank of Taiwan; C Bonert, Banque & Caisse d'Epargne de l'Etat; D Readman, Barclays Bank; C Stracke, BT Alex Brown; J Krijgsman, CIBC Wood Gundy; P Lok, Conference Board of Canada; F Nicollas, Crédit Lyonnais; M Swoboda, Credit Suisse First Boston; K Schestauber and T Spanel, Creditanstalt; R Schneider, Dresdner Bank; S Clark, Dun & Bradstreet; C Schuller and P Svoboda, Erste Bank; A Yap, FDA Financiële Diensten Amsteram; R Prior, HSBC Economics & Investment Strategy; J Hussman, Hussman Econometrics Advisory Service; G Verberne, MeesPierson; R Heiskanen, MeritaNordbanken; D Kern and C Yeo, NatWest Group; D Porter, Nesbitt Burns; N Braems, Oppenheim Finanzanalyse; International country risk guide, PRS Group; G Samu, Royal Bank of Canada; H Kalita, Royal Bank of Canada; R RatcliVe, SG Cowen Securities; T Nicholson, Sparks Companies.
Methodology for main ranking
To obtain the overall country risk score, Euromoney assigns a weighting to the nine categories listed below. The best underlying value per category achieves the full weighting (25, 10 or 5); the worst scores zero and all other values are calculated relative to these two. The formula used is the following: A - (A / (B-C)) x (D-C), where A = category weighting; B = lowest value* in range; C = highest value* in range, D = individual value.
* NB for Debt indicators and Debt in default, B and C are reversed in the formula: the lowest score receives the full weighting, the highest zero.
* Political risk (25% weighting): the risk of non-payment or non-servicing of payment for goods or services, loans, trade-related finance and dividends, and the non-repatriation of capital. Risk analysts give each country a score between 10 and zero - the higher, the better. This does not reflect the creditworthiness of individual counterparties.
* Economic performance (25%): based (1) on GNP* figures per capita and (2) on results of Euromoney poll of economic projections, where each country's score is obtained from average projections for 1999 and 2000. The sum of these two factors, equally weighted, makes up this column - the higher the result, the better.
*GNP figures were unavailable for the following countries, so GDP data were used instead: Afghanistan, Bahrain, Brunei, Cuba, Djibouti, Iraq, North Korea, Kuwait, Liberia, Libya, Macau, Myanmar.
* Debt indicators (10%): calculated using these ratios from the World Bank's "Global development finance 1999": total debt stocks to GNP (A), debt service to exports (B); current-account balance to GNP (C). Scores are calculated as follows: A + (B x 2) - (C x 10). The lower this score, the better. Figures are for 1997.
Because of lack of consistent economic data for OECD and rich oil-producing countries, these score the full weighting, except where they report debt figures to the IMF. Developing countries which do not report complete debt data get zero.
* Debt in default or rescheduled (10%): scores are based on the ratio of rescheduled debt to debt stocks, taken from the World Bank's "Global Development Finance 1999". The lower the ratio, the better. OECD and developing countries which do not report under the debtor reporting system (DRS) score 10 and zero respectively.
* Credit ratings (10%): nominal values are assigned to sovereign ratings from Moody's, Standard & Poor's and Fitch IBCA. The higher the average value, the better. Where there is no rating, countries score zero.
* Access to bank finance (5%): calculated from disbursements of private, long-term, unguaranteed loans as a percentage of GNP. The higher the result, the better. OECD and developing countries not reporting under the DRS score five and zero respectively. Source: the World Bank's "Global Development Finance 1999".
* Access to short-term finance (5%): takes into account OECD consensus groups (source: ECGD) and short-term cover available from the US Exim Bank and NCM UK. The higher the score, the better.
* Access to capital markets (5%): heads of debt syndicate and loan syndications rated each country's accessibility to international markets at the time of the survey. The higher the average rating out of 10, the better.
* Discount on forfaiting (5%): reflects the average maximum tenor for forfaiting and the average spread over riskless countries such as the US. The higher the score, the better. Countries where forfaiting is not available score zero. Data were supplied by Bank of America, Morgan Grenfell Trade Finance, Standard Bank and West Merchant Capital Markets.
Country Risk: In search of a safe haven
Global Economic projections
