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For historical country risk data please visit the Euromoney Country risk website |
Got to: | Economic projection results
Euromoney’s country risk analysts agree that the improvement in global economic conditions so far this year will continue into 2005, with strong growth globally. Rising US trade and budget deficits, the continuing war on terror and geopolitical instability do not overly concern them.
Thierry Apoteker of TAC Consulting says that “a better international environment, especially for commodity and oil producers, has combined with a renewed risk appetite by international investors to trigger simultaneous improvement in growth performances and improved external balances in many countries, notably in Africa, the Middle East and the Indian subcontinent”.
The economy of the US (ranked 4) has recovered strongly, with a growth rate of 3.9% forecast for 2004 and 3.6% for 2005.
Japan’s (15) ranking has improved thanks to a recent upsurge in demand, as well as export growth. Its upswing was driven in part by better investment prospects in the manufacturing sector and fast-growing markets in other Asian economies.
There is a consensus on strong growth in Asia among Euromoney’s analysts. Brian Coulton of Fitch Ratings in Hong Kong says: “Asia looks set to be on the front line of the global economic recovery in 2004 with Asia excluding Japan predicted to expand by 6.25%, spurred by surging inflows of international capital.”
Continuing growth in China Our analysts predict a GNP growth rate of 8 % in 2004 and 7.5 % in 2005 for China (45). But Asia is in turn geared to the US economic recovery. Apoteker says that “questions about the Chinese overheating are still valid, and the successful management of the required cooling is a major challenge, but it is not expected that significant difficulties will emerge in 2004”.
According to Fitch Ratings analysts, China, Thailand (39) and India (52) are showing the greatest dynamism, with forecast GDP growth rates for 2004 of 8.5%, 7% and 6% respectively, as robust export performance coincides with strong domestic demand.
The breaking of the Growth and Stability Pact by France (14) and Germany (12) underscored the weak performance of the eurozone countries, where the strengthening currency is endangering efforts to compensate for weak domestic demand with export-led growth, according to Linda Yueh of the London School of Economics.
In the survey, among the 10 EU accession states, those from eastern Europe fared batter than their Baltic counterparts, in part because of their greater attractiveness to foreign investors.
James Ker Lindsay of Civilitas Research believes that there is a real hope Cyprus (32) may finally be reunited. “If this were to happen it could lead to new levels of economic prosperity,” he says.
“The key issue for Turkey (75) this year is Cyprus,” says Ker Lindsay. “Without a concerted Turkish effort to ensure a solution, the EU has made it very clear that it will be very difficult – read impossible – to start full membership talks with Ankara.”
Kazakhstan (61) rose in overall country risk, and economic performance rankings (58). Our analysts predict growth rates of 8.5 % for 2004, and a similar outlook for 2005 as a result of rising oil output.
Improvement in the Indian subcontinent countries “coincides with a very significant political evolution in the region, as highlighted by the rapid détente between India (59) and Pakistan (92)”, notes Apoteker. Tanvir Abid, of Jahangir Siddiqui Capital Markets, believes Pakistan’s economic variables and direction continue to be encouraging based mainly on strong agricultural growth prospects and upbeat export demand in key markets. He says Pakistan should hit the $12.1 billion 2004 target on the back of strong textile exports, greater external demand and improved domestic production.
In Africa, our analysts downgraded Nigeria to 127 overall and 132 in economic performance because of continuing problems including rampant corruption and a government that is still not seen to be responding to the country’s needs. The discovery of extensive oil fields, the expansion of a liquefied natural gas project and the auction of oil blocks in the Joint Development Zone (between São Tomé & Príncipe (150) and Nigeria), point to more activity this year.
Sub-Saharan stock markets outstripped expectations, with markets in Ghana (110), Nigeria and Kenya (116) generating US dollar returns in excess of 50%, says Afrinvest’s Sruti Patel.
The resumption of donor lending to Kenya and the establishment of a transitional government in the Democratic Republic of Congo (182) should attract renewed interest from international investors.
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For historical country risk data please visit the Euromoney Country risk website |
