A SUPPLEMENT TO EUROMONEY/SEPTEMBER 1997WORLD ECONOMIC ANALYSISThe US tops Euromoney’s country risk ranking for first time since September 1994, achieving maximum points in every section, notably for political risk and economic performance. The country has been climbing steadily in the last few surveys but it seems its growth has peaked, since economists participating in the survey forecast a drop in GNP growth from 3.4% this year to 2.45% in 1998. Other countries marching up the top 10 include the Netherlands at number three, Norway at five and Austria at nine, all of which rank high up in our table of economic projections. The Netherlands’ GNP growth is set to rise from 2.91% to 3.06% over the next 12 months and Austria looks forward to a 5.16% rise in economic performance with increased GNP growth of 2.27% in 1998. Among emerging markets, Latin America performs particularly well. Chile scrapes into the top 30 at 29, up three places since last March. The peso has remained steady all year and economic recovery is well underway. Last year’s fears of overheating have receded. But the highest climbers in the top 100 are Argentina – up 7 to 52, El Salvador – up 13 to 65, Venezuela – up 9 to 71, Guatemala – up 20 to 73, Honduras – up 14 to 90, and Panama – up 14 to 60. Since January, Panama has received credit ratings from Moody¹s and Standard&Poor¹s and has successfully issued its first 144A Eurobond for $500m. Economists foresee all six countries performing significantly better over the next 12 months. Poland is the success story in central and eastern Europe, rising 15 places to 47. Judging by the amount of direct foreign investment last year – almost $6 billion – investors view the country as a safe haven. That figure should be even higher for 1997. Its privatization programme is running smoothly, and Poland boasts one of most liquid stock markets in the region. Investor sentiment is up in Russia, too, after a successful six months in the international capital markets: two sovereign and two municipal bond issues, three bank bonds, one convertible deal for Lukoil and Gazprom¹s $2.5 billion syndicated loan lead-managed by Dresdner Kleinwort Benson. Asian countries continue to fall down the list by an average of four places, with the exception of China and the Philippines which both climb five. Thailand drops further, down 12 to 46. Its foreign debt crisis, triggered by property company Somprasong’s default on its convertible Eurobond, caused a run on the Baht back in April. In the same month, Moody’s downgraded its sovereign rating from A2 to A3. It comes as no surprise, therefore, that economists and analysts rate Thailand lower than they did in March: 50.04 for economic performance, down from 69.22, and 14.91 for political risk, down from 16.87. South Korea also sees its figures tumble, after six months of political and financial scandals. Its score is down for political risk and economic performance, from 20.00 to 18.31 and 75.37 to 63.02 respectively. South Africa, Zimbabwe and Kenya are among the African countries gaining ground, but Botswana, at 67, has slipped behind its position last September (65), after a high economic score put it in 57th place in March. Research by Sharon Goldberg |
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