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For historical country risk data please visit the Euromoney Country risk website |
| Global economic projections | Methodology
The results look encouraging for eastern Europe and Latin America; they look worrying for Asia.
Every six months, Euromoney polls economists and political analysts for their views on the creditworthiness of almost 170 countries around the world. To that, we add an array of quantitative data, from debt ratios to access to capital markets (see detailed methodology). The result is a sensitive measure of the riskiness of investing in these economies.
This month’s rating justifies the growing perception that Asia is become economically mature and more politically unstable. On average, the Asian countries have slipped in the ranking by 2.5 places. Political tensions explain the fall in Indonesia, down two places from March’s ranking to 41. The recent run on the baht and concerns about a build-up in short-term debt are behind the four-place drop of Thailand to 30. Japan falls even further from fourth to 12th as its economy, which earlier in the year looked to be recovering, slides back into stagnation. Our economists predict that growth in GDP will decline to 2.2% in 1997, down from an estimated 3.1% this year.
The only rising economies in Asia, it seems, are in Indochina. Vietnam rises three places to 63, partly as a result of its membership of Asean; it is also expected to debut in the international bond market next year. Even Cambodia rises10 places, although it remains lowly-ranked at 109.
The beneficiaries are mostly in eastern and central Europe, as the reform programmes put in place since the fall of Communism begin to bear fruit. The biggest riser in the region is Slovenia, which is now seen as fractionally more creditworthy than the Czech Republic. Its economy is expected to grow by more than 4% both this year and next. Poland, though, is forecast to produce the fastest growth in central Europe this year and next more than 5% a year. As a result, it moves up three places.
Russia, despite its continuing economic problems, is a fast-improving credit too. As recently as last September it ranked a lowly 142. In March it rose to100; now it is 86. Boris Yeltsin’s re-election removed some of the political uncertainty, although his heart operation announced after our poll was conducted will inevitably increase it again.
The Baltic States have also improved, particularly Lithuania, the highest ranked of the three, which rises 26 places to 59th. All three countries now haveaccess to the international bond market. Their economies are looking healthy too:all are expected to show solid growth next year.
The evidence of the Country Risk Ranking is that confidence in Latin American countries has recovered remarkably since last year’s Mexican peso crisis. Mexicois up to 52nd from 57th this time last year. Its economy is expected to accelerate to 3.5% growth in 1997. The other major economies, Brazil and Argentina, both rise three places. The most spectacular rises, though, are in theregion’s smaller economies: Panama moves up 14 to 69, Peru up six to 73,Venezuela up nine to 78, and Ecuador up eight to 80.
Sub-Saharan African countries countries continue to lose ground, with Botswana down 10 to 65 and Zimbabwe down five to 76. South Africa can consideritself lucky to rise one place in the ranking to 48, despite the disastrousdecline in the rand over the past six months.
Research by Rebecca Dobson and Cara Solomon
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For historical country risk data please visit the Euromoney Country risk website |
