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