Several Economic Darlings among List of 5 Most Vulnerable Nations

Concern about the prospects of the economies of many emerging economies, including several recent pace-setters, continued to build as evident in Coface’s unveiling of its most recent roundup of Country Risk Trends.

Paul Ballew, chief data, insight and analytic officer at Dun & Bradstreet, was among speakers at the Coface Country Risk Trends release, noting a dubious turnaround from formerly hot conditions in many emerging economies. He blamed an unprecedented monetary easing the encouraged large capital inflows and the subsequent credit and housing bubbles, all of which appear to be long-finished, for causing what, in hindsight, was unsustainable growth. As such, he listed the most vulnerable, "bubbly" nations at present are as follows: Venezuela, 2014 World Cup host and 2016 Olympics host Brazil, Turkey, India and Malaysia. The rankings are based on human capital, physical capital, competitiveness and openness. Malaysia and Turkey, however, do show some ability to shirk off asset bubbles because of supply-side improvements there, Ballew noted.

“Emerging markets are not homogeneous, and the last five years have arguably exacerbated these differences,” Ballew said in prepared comments released by Coface. “Some markets are looking especially vulnerable in 2014, while others have gone some way to strengthening their ‘pillars of development’ and alleviating political risk.”

Among emerging nations with the lowest political, economic and supply-side risk in the latest research were Chile, Hungary, Poland, the Philippines and Mexico. Because of them, as well as some other nations, cautious optimism exists for emerging economies to grow, on aggregate, at a faster pace than those from advanced, traditional powers through 2018.

- Brian Shappell, CBA, CICP, NACM staff writer

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