India at the Top with 7.4% Growth Forecasted in 2016, 0.9% Higher
than China
· Three South Asia Countries in Top
Five
· China, Taiwan in Grave Risk of
Recession
With China’s growth targets in doubt with
the overheating, India will stand out for being the only economy in the world
to expand more than 7 percent.
China, on the other hand, is enduring the slowest growth in a
quarter century and is forecast to expand at 6.5 percent this year.
Asia and Africa are the motors for global growth this year,
accounting for 12 of the 20 best performers. The largest of these- China
(6.5%), India (7.4%) and Indonesia (5.2%) - combined make up more than 17
percent of global gross domestic product and 40 percent of the world’s
population. Add the other plus six percent growers Bangladesh and Sri Lanka.
With an economy nearly five times larger than India’s, China
remains the true heavyweight.
To spur investment, Reserve Bank of India Governor Raghuram Rajan cut borrowing
costs four times last year. Though competitors, China is also India’s largest
trade partner, so a slowdown there would hurt exports, which are already deep
in negative territory.
For
impressive growth, look to Africa with four countries making the cut: Uganda,
Nigeria, Kenya and Ghana. Among the 10 African nations surveyed, Uganda emerged
as the continent’s best performer with expected growth of 5.6 percent this
year. This in spite of a volatile political landscape ahead of February
elections.
Ireland
is the only euro economy to make the list with growth of 4.1 percent expected
this year. After years of austerity and a bailout, the Celtic Tiger is set to
roar again while many of its European peers still struggle.
Meanwhile, on the other side of the Atlantic, the U.S. is
forecast to grow 2.5 percent in 2016, placing the world’s biggest economy near
the top of the field compared to its developed market peers.
Deflation-pained
Japan is forecast to grow 1 percent this year, lagging behind many of its neighbors who made the projected list of 2016’s best
performers. The country’s Cabinet recently approved a record budget for next
fiscal year, betting that fiscal stimulus and labor
market reform will boost growth.
Oil-rich
Venezuela will contract by 3.3 percent this year, the worst forecast of any of
the 93 countries, followed by junk-rated Brazil, debt-laden Greece and
commodities-ravaged Russia.
The
club no one wants to join has some surprises. Among the nations with a 50-50
chance of two quarters of contraction is Taiwan. Its annual growth rate slow
dramatically from 4 percent in the first quarter of 2015 to minus 0.6 percent
in the third quarter due to a slowdown in exports to China.
Even with expected growth this year of 1.2 percent, Ukraine,
one of last year’s worst performers, is still at risk. Economists rate its
chance of recession over the next 12 months at 60 percent, the third-highest
tied with Argentina.
The
outlook is dire for bottom-ranked Venezuela: from shortages of basic goods such
as medicine to the collapse in the price of oil, which accounts for 95 percent
of the country’s exports, the nation is looking at a third straight year of
negative GDP. The opposition party taking over congress for the first time in
16 years offers brave investors a glimpse of good news.
The situation doesn’t get much better elsewhere on the
continent. Brazil’s 2016 GDP forecast combined with last year’s drop puts the
country in its deepest recession since at least 1901. Two major credit rating companies have
already downgraded its sovereign debt to “junk” status.
Next door in Argentina, newly-elected President Mauricio Macri is steering the country in a new direction to dodge
economic catastrophe and prevent a drop in GDP this year. Sworn into office
last month, he has already begun to implement measures aimed at bolstering
growth and reigning in the country’s fiscal deficit.
Russia
will stay in negative territory after contracting about 3.6 percent in the
first nine months of last year, but will also turn the corner on what will
likely be its longest recession in over two decades. Sanctions from the U.S. and
European Union as well as low oil prices, which account for 40 percent of the
government’s budget revenues, took their toll.
Finland and Switzerland also made the expected list of 10
worst performers for 2016. The former suffers from its geographic proximity and
economic reliance to Russia while the latter is still reeling from a surprise
central bank decision to drop its currency cap, which crippled exports and
tourism.
The
Performers and the Recession Prone
|
Country |
2016
GDP Forecast |
Recession
Probability |
|
India |
7.4% |
0% |
|
Vietnam |
6.6% |
|
|
Bangladesh |
6.6% |
|
|
China |
6.5% |
12% |
|
Sri
Lanka |
6.4% |
|
|
Kenya |
6.1% |
|
|
Panama |
6.1% |
|
|
Philippines |
6.0% |
5% |
|
Uganda |
5.6% |
|
|
Dominican
Republic |
5.4% |
|
|
Indonesia |
5.2% |
10% |
|
Ghana |
4.6% |
|
|
Malaysia |
4.5% |
10% |
|
Qatar |
4.5% |
|
|
Nigeria |
4.4% |
|
|
Bolivia |
3.9% |
20% |
|
Slovakia |
3.3% |
8% |
|
Thailand |
3.2% |
5% |
|
Turkey |
3.0% |
20% |
|
Bosnia
& Herzegovina |
3.0% |
|
|
Colombia |
2.8% |
8% |
|
Mexico |
2.8% |
10% |
|
Sweden |
2.8% |
10% |
|
Spain |
2.7% |
5% |
|
Czech
Republic |
2.7% |
10% |
|
Australia |
2.6% |
15% |
|
Bulgaria |
2.5% |
10% |
|
United
States |
2.5% |
15% |
|
Uruguay |
2.0% |
25% |
|
Kazakhstan |
2.0% |
33% |
|
Taiwan |
2.0% |
55% |
|
Eurozone |
1.7% |
15% |
|
Serbia |
1.6% |
18% |