29 countries to contract in 2009, says Economist Intelligence Unit

Posted: December 23, 2008 in Financial, General
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Risks to most economies still firmly on the downside

The global financial crisis will continue to have a very damaging impact on the global economy in 2009, resulting in a sharp slowdown in economic growth that will spare few countries. According to 2009: country by country, just published by the Economist Intelligence Unit, 29 countries—mostly developed markets, but also some major emerging markets—will experience economic contractions next year. The report predicts that global GDP growth (at market exchange rates) will be just 0.9% in 2009. China will be the fastest-growing major emerging market, although even it will see its growth rate ease substantially.

The poor outlook is further constrained by an exceptionally high level of political and economic risks. Downside threats in 2009 include:

  • Further financial shocks which prevent the global financial system from stabilising
  • Protectionist policies driving an even greater contraction in world trade
  • Geopolitical risks, including continued worries about Iran’s nuclear ambitions, the ongoing threat of major terrorist attacks and political instability in a number of key countries.
World growth league table, 2009a
(Real GDP growth, %)
20 fastest-growing countries 20 slowest-growing countries
Qatar 13.7 Iceland -9.7
Malawi 8.3 Zimbabwe -4.7
Angola 8.2 Latvia -4.0
Ethiopia 7.5 Venezuela -3.0
China 7.5 Ukraine -3.0
Congo (Brazzaville) 7.3 Taiwan -2.9
Djibouti 7.0 Estonia -2.5
Azerbaijan 6.9 Ireland -2.3
Tanzania 6.9 Singapore -2.2
Gambia 6.4 United Kingdom -2.1
Uganda 6.4 South Korea -1.7
Rwanda 6.3 Denmark -1.6
India 6.1 Hungary -1.5
Iraq 6.1 Spain -1.2
Burundi 6.0 Sweden -1.1
Democratic Republic of Congo 6.0 Hong Kong -1.0
Liberia 6.0 United States of America -1.0
Ghana 5.8 Italy -1.0
Madagascar 5.8 Seychelles -1.0
Burkina Faso 5.6 New Zealand -0.9
a Economist Intelligence Unit forecasts.

2009: country by country, the well-established annual forecasting guide from the Economist Intelligence Unit, contains a concise assessment of the political and economic prospects for the year ahead for almost 200 countries, together with key economic indicators and a summary of forecast numbers.

Highlights in the 2009 edition include:

  • The US, Japanese, euro zone and UK economies will all experience recessions in 2009.
  • Sub-Saharan Africa will perform better than other emerging regions. Fully 15 of the 20 top-performing economies in 2009 are in this region, led by Malawi and Angola. Several African nations will actually buck the global trend and experience a pick-up in real GDP growth.
  • Despite less direct exposure to the global credit crunch than other emerging regions, Latin America will be particularly badly affected by the downturn in the US. The impact will be felt in terms of lower export growth, fewer tourist arrivals, lower remittances and softer commodity prices.
  • Inflationary pressures will fall across the world as aggregate demand slumps and commodity prices fall.
  • The difficult economic environment will test the skill of policymakers almost universally, as governments around the world focus on mitigating the impact of the global downturn in their own countries.
  • Political risks will remain elevated the world over. Tensions in the Middle East, South Asia and the Caucasus will remain unresolved.

The Report extract from Economic Intellegence Unit website journal.

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