ECR Survey Results Q1 2011 – Middle East drops, sub-Saharan Africa rises
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ECR Survey Results Q1 2011 – Middle East drops, sub-Saharan Africa rises

Euromoney’s latest country risk results reflect political turmoil in the Middle East and the continued uncertainty within the Eurozone. The global recovery is in serious danger of being undermined by a host of financial and political risks. Andrew Mortimer reports.

Euromoney would like to extend a thank you to economists/institutions for their contributions. 

The recovery from the global financial crisis continues to pick up pace but the world remains fraught with financial risk. Since Euromoney last compiled country risk data in September, Portugal, Ireland and Greece have all continued their slide down the ECR rankings. Elsewhere, the public finances of Spain, Belgium and even France have come under scrutiny. Concerns about elevated public and banking sector debt levels in the developed world remain, with none of Germany, the UK or the US making it into the top-10 safest countries.

Sluggish growth, high inflation and high levels of government debt continued to weigh upon the UK and the US in the Euromoney rankings. The UK fell one place to 16th in the table after the economy contracted by 0.6% in the fourth quarter of 2010. Although business activity ticked up sharply in January, inflation hit 4% in the same month, double the Bank of England’s target. The US rose one place in the rankings after posting positive production and job figures in 2011. “Uncertainty still remains over the sluggishness of the recovery in the US and UK given the looseness of monetary policy”, says Johann Krijgsman, formerly head of country risk at BCI. “Neither country’s banking industry is out of the woods yet. The continued problems in mainland Europe have done nothing to improve sentiment.”

Both Portugal and Ireland fell into the third tier of the Euromoney Country Risk rankings. Since being forced to negotiate an €85 billion programme for assistance from the EU and IMF, Ireland has fallen from 21st in the table to 38th. Portugal fell 12 places to 44th as economists responded negatively to the country’s escalating public debt problems. The Portuguese economy contracted by 0.3% in the fourth quarter of 2010.

A number of countries in the Middle East have struggled after mass protests shook the Arab world – Egypt (down 23 places), Tunisia (down 12), Yemen (down 25) and Saudi Arabia (down 3). In the Gulf, the political risk posed by the protests was offset by the resurgent price of oil, with Qatar (up one) and UAE (up one) seeing modest gains. Nevertheless, the survey results highlight the seismic changes taking place in the region: the average political risk score for MENA countries has fallen by 9% since September.

The Nordic countries remain the world’s favourite safe havens. The combination of broadly diversified economies, strong social welfare provisions and institutional strength continues to reassure investors and economists alike. The Nordics are joined at the top of the table by Singapore, whose stellar growth in 2010 has propelled it to 6th in the table. Spurred by the strong performance of Malaysia and Indonesia and by a rebound in domestic manufacturing, Singapore has climbed six places since September. The city state, which retained its number one position in the World Bank’s Doing Business Survey, overtook Hong Kong, whose close links to China affected its performance. It fell by two places, dropping out of the top 10.

Russia, India and China all fell in the first half of the year. Weighed down by low scores in political risk and corruption, Russia fell five places and now ranks below Mexico, Turkey, Indonesia and Lithuania in the table. “Political risk in Russia remains elevated due to the dominant position of United Russia and the inability for a credible plural opposition to operate freely,” says Mandy Kirby, a political analyst at Maplecroft. “The harsh verdict on and sentencing of businessmen Mikhail Khodorkovsky and Platon Lebedev in late 2010 on charges of theft and money laundering drew strong international criticism for apparent political motivation.”

India also fell by eight places as concerns mounted about the effect of food inflation on the country’s poor and the recent corruption scandal over the Commonwealth Games. “Recent corruption scandals in India are definitely damaging to the economy, in both the short and medium term”, says Rebecca Jackson, principal analyst at Maplecroft. “Besides the direct impact on the economy, the political turmoil caused by the 2G auction scandal has paralysed parliament, having a detrimental impact on key reforms, such as further delaying the Goods and Services Tax (GST) needed to keep the country competitive.” The possibility that the Chinese economy might be in danger of overheating pushed the country down four places to 40th in the table.

The standout performers in sub-Saharan Africa are Nigeria (up 16) and Ghana (up 9). The Nigerian economy grew by almost 8% last year. Given the scope for development in both the oil sector and other sectors such as agriculture and telecoms, it looks set to continue on its strong growth path. Nonetheless, risks remain on the horizon: the upcoming elections in 2011 could cause disruptions while double-digit inflation, if left unchecked, could lead to dissatisfaction and potential unrest. Ghana experienced its first full year of oil production, but its politicians will need to develop the legal framework to govern oil revenue collection if it is to rise any further up the table.

The riskiest countries in the rankings remain the ones most affected by natural disasters or high levels of conflict, including the Central African Republic, Democratic Republic of Congo, North Korea and Haiti.

For the full Euromoney Country Risk results, go to

Euromoney Country Risk: The latest word in country risk

THE WORLD HAS become ever more unpredictable in the past 12 months. In the space of weeks, popular protests in Egypt and Tunisia have toppled entrenched regimes and reminded investors of the inherently risky nature of emerging markets business. Elsewhere, doubts about the sustainability of Chinese growth and inflationary pressures in Asia have had many investors running to the sidelines. Simultaneously, governments and central banks in the eurozone have struggled with high levels of public-sector and private-sector debt and faced anaemic growth elsewhere in the developed world. Hungry for higher yields, many investors have sought to gain exposure to resource-rich, frontier markets in sub-Saharan Africa and central Asia. But where can they find the expertise to guide them through the political, social and economic factors that will make or break their investments?

Step forward Euromoney Country Risk, the latest word in risk management from Euromoney. Drawing on the its wide network of economists and risk management professionals, Euromoney has provided the latest word on political, social and economic factors that influence the commercial attractiveness of a particular market.

An updated version of Euromoney’s long-standing survey of country risk, Euromoney Country Risk takes the existing methodology and places it at the nexus of a vibrant social networking platform. The resulting interface is both a powerful analytical tool and a real-time news service that enables users to tap into the expertise of economists around the world.

Previously, users of the semi-annual survey had to wait for up to six months before witnessing how global events had affected score changes. Now users can receive the tried and tested results of the survey in real time. As a user, you can follow and provide a score for any country of your choice. As well as monitoring score changes in real time, you will receive news flow on your selected countries from a full range of Euromoney titles. Beyond this, you will also have access to original research published by the ECR editorial team. If that wasn’t enough, by following experts who cover the region, you will be able to contact them directly and read their published research on the site.

Euromoney Country Risk now measures up to 60 different categories of risk across a spectrum of political, economic and structural criteria. The site is now in beta. 

Country risk ranking acknowledgements

For live country scores and rankings go to to register. View the March quarterly country score rankings

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