Friday, December 09, 2005

Forecasts of political and economic trends

One thing stands out when you look at the league table of the fastest-growing countries in 2006: it helps to be a hydrocarbons producer. Mauritania, a new producer of oil, will see its GDP expand by fully 25%, as will Azerbaijan, where output of both gas and oil is expected to surge. This spectacular expansion comfortably puts the two countries joint top in the 2006 growth league.

Powerful growth by other energy-rich countries, such as Angola, Chad, Qatar and Kazakhstan, means that even China—the world’s high-growth darling—has to be content with tenth place. And that illustrates what sets this volume apart: it looks not just at the favourite big markets, but also at the smaller, less familiar ones, where there are plenty of
opportunities for businesses eager to identify avenues for growth. After
relentlessly cutting costs and seeing their profits rise to record levels, companies
will be under intense pressure to show revenue growth. For many, part of the
answer will lie in identifying the most promising growth markets around the
world—India and China, naturally, will figure on most companies’ lists, but so
too should many others of the nearly 200 countries covered in this report, in
both developed and (especially) emerging markets. It is striking that aggregate
growth in the rich OECD countries (measured at market exchange rates) will be
a modest 2.3% in 2006, while that in non-OECD countries will be 6.3%.
In assessing the prospects for 2006, three other considerations should be borne
in mind. First, the risks that could affect our baseline growth forecasts remain
unusually high. Those risks range from a bird-flu pandemic to the impact of a
house-price collapse or a new oil shock. Above all, the huge imbalances in the
US economy will continue to be a worry: the United States will need an inflow
of some US$900bn in foreign cash in 2006, and the possibility of a dollar crisis
cannot be ruled out.
Second, the interplay between politics and economics will loom large,
especially in the Americas. Most of the region’s major economies (the United
States, Canada, Mexico, Brazil) and plenty of medium-sized ones (including
Colombia, Peru and Venezuela) will be holding elections in 2006. The outcomes
could have an important impact on business prospects.
Third, some of the best opportunities may lie in countries that have until
recently been among the least fashionable. In particular, Japan and Germany—
respectively the world’s second- and third-largest economies—may become
surprisingly strong performers after years in the doldrums. Whether your
interests lie in the fast-growing parts of Africa and Asia, in the Americas or in
the mature economies of Germany and Japan, this report summarises the key
developments that will shape the business outlook. Country by country, it is
your guide to the world in 2006.

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