10 COUNTRIES LEAST AFFECTED BY THE US FINANCIAL CRISIS
BusinessPundit
October 8, 2008 Wednesday 2:00 PM EST
Oct. 8, 2008 (BusinessPundit delivered by Newstex) — It’s official:
The United States financial crisis has reverberated around the
world. Wall Street’s supernova imploded into a black hole, swallowing
up the national economy, then destabilizing most locations reachable by
commercial jet. That is to say, everything, everywhere. Nonetheless,
some countries are faring better than others in this stage of
the crisis. While Spaniards offer […]It’s official: The United
States financial crisis has reverberated around the world. Wall
Street’s supernova imploded into a black hole, swallowing up the
national economy, then destabilizing most locations reachable by
commercial jet. That is to say, everything, everywhere. Nonetheless,
some countries are faring better than others in this stage of the
crisis. While Spaniards offer banks their house keys, Malaysians
shrug. While Americans talk nonstop about the Second Great Depression,
Dubai investors are enjoying one of the biggest real estate booms in
the tiny United Arab Emirates’ history. Thailand sighs with relief
at its sizable reserves, and Armenia finally thanks the heavens above
for its obscurity. Here are ten countries suffering 80-100% less than
the United States: 10. China I was surprised to learn that China may
not be dramatically affected by the United States financial crisis.
As it turns out, we in the US rely far more heavily on China than
she does on us. China owns roughly 19% of US treasuries; if needed,
it plans to use its sizable budget surplus to snap up even more. In
addition, the United States gobbles up the majority of Chinese-made
goods, meaning a decrease in consumer demand here will make for
a chilly Chinese export market. However, China is not solely
dependent on the United States for financial stability. A host of
new trade agreements mean China has a number of potential suitors
waiting for vast quantities of goods. Domestic demand is also on the
up-and-up. Finally, China’s financial system has been closed for many
years, protecting it from shady assets. Though the country will feel
the international slump, its banking system is probably safe. Its
high domestic demand, huge pile of capital, and numerous other major
trading partners will counter the effects of US contagion. Bad News:
China would be badly hurt by a downturn in export demand from the
United States and Europe. It may yet be seriously affected. Good News:
They can rely more on domestic demand and demand from less-affected
countries, such as Brazil. They’re also sitting on a mountain of cash,
which they are using to help bail out the United States. 9. Brazil
Latin American economies have boomed over the past few years. Brazil,
unlike some of its neighbors, stabilized its domestic economy while
positioning itself for increased foreign investment. The United States
is currently Brazil’s biggest trading partner, but is looking to boost
transactions with China and India, other major partners. Bad News:
The United States is Brazil’s biggest trading partner. Good News:
Brazil is positioned to take advantage of trade agreements and foreign
direct investment from India and China, two economies at the top of
the world ladder. 8. Romania Romania’s banks are barely exposed to
international lenders.
Therefore, any economic slowdown it feels will be a secondary result of
global patterns. No shocks have occurred in the country itself. Known
by its own journalists the "tiger of the east," Romania’s economy
has been growing rapidly for the past few years. Though heavily
embroiled in the EU’s economy, especially Italy’s, Romania is one
of the world’s biggest military equipment exporters. Bad News: High
exposure to the EU and foreign direct investment subject Romania to the
general effects of the coming global recession. Good News: The country
remains a hot FDI destination for European companies looking for a
good deal. Its strong IT services sector–like a mini-India for the
EU–is especially attractive. And then there’s that military thing,
a sure winner in today’s conflict-rich world society. 7. Thailand
AIG’s gigantic Thailand subsidiary, AIA Thailand, has more than half
of the Thai market cornered. It’s also sitting on 286.67 billion baht
worth of reserves (about 8.3 billion US dollars), 383 billion baht
($11.1 billion) worth of assets, and capital funds worth roughly 1100%
of the legally required minimum. Foreigners affected directly by
the US financial crisis may have outstanding loans in Thailand. The
country, however, isn’t worried, because the amount of these loans
is relatively small. Bad news: Thailand’s largest insurance company
is an AIG (NYSE:AIG) subsidiary. Good news: It’s sitting on a pile
of cash. 6. North Korea Although the country has recently enjoyed
burgeoning trade ties with South Korea and China, both vulnerable
to the US financial crisis, North Korea remains isolated enough to
limp through the financial crisis relatively unscathed. Bad News:
No stranger to famines and subsistence farming, people living in this
brittle Communist relic may lose hope as foreign direct investors from
affected countries stall capital inflows. Good News: North Korea’s
economic isolation will, for once, come in handy. 5. Iran Longstanding
sanctions have kept Iran’s economy relatively insulated from foreign
investment outside of a select few sectors. One of those sectors is
oil–and China is one of its biggest trading partners. A fortuitous
arrangement for all. Bad News: Iran trades a lot with Europe, which
is moldering under the financial crisis. Good News: Iran does not
trade with the United States. It does, however, provide petroleum
to oil-hungry China, a business that should float the country for at
least another decade. 4. Malaysia This Southeast Asian country hosts
a number of multinational manufacturing facilities. Though some of
these companies are in the United States, experts say that bad times
will promote more offshore production in bargain-rich Malaysia,
not less. Malaysia is also gaining a reputation as a good China
alternative in manufacturing circles. It’s rumored to be slightly
more expensive, but produces higher quality goods, and is easier to
deal with. Malaysia is also gaining a reputation as a solar energy
hotspot. Bad News: Malaysia does a lot of business with the United
States. Good News: Companies looking to cut costs come to Malaysia,
making it an even more likely outsourcing destination for leaner
businesses. 3. Morocco Moroccan officials claim not to be affected by
the United States financial crisis because their banks don’t contain
any subprime assets. But that notion only scratches the surface of
why Morocco will survive the shakeup. Its resource and agricultural
assets are the real keys to its invulnerability. For one, this stable,
slow-growth economy relies heavily on agricultural assets, such as
almonds. It could feed its entire domestic population with the food
it produces, beneficial in a world of rising food prices. Half of
its income comes from valuable phosphate mines–32% of the world’s
reserves"a commodity whose prices have increased 700% during the past
two years (triggering talk of "peak phosphorus"). Bad News: Morocco
is heavily involved in foreign direct investment, especially from
France, and tourism to boost its economy. These two assets will likely
diminish because of the United States crisis. Good News: Morocco’s
natural assets, including its coveted phosphate, will keep its economy
greased enough to offset any losses. 2. Armenia This small Eurasian
country hasn’t involved itself much in foreign affairs. Banking is
no exception. Its relatively undeveloped financial market has so
few interests in the outside world that the crisis didn’t make a
blip. Bad News: Integration with outside markets means development
for small countries like Armenia. Officials hunger to expose it more
to external markets. Good News: That same lack of exposure protected
Armenia from the US crisis. It could be argued that Armenia is the
least affected country of all. 1. The United Arab Emirates Driven
by regional oil exports, the United Arab Emirates boasts one of the
world’s fastest-growing economies. The UK’s Guardian calls it the home
of the "Arabian Dream," the world’s new version of the spent American
dream. Dubai’s free trade zone, exalted commercial real estate market,
and financial services make it an international powerhouse. This
growth was fueled by oil revenues, but now has a momentum of its
own. Bad News: The UAE’s international problems revolve more around
money laundering than the US financial crisis. Good News: Almost
everything. The place is booming. If anyone reading this post lives
in the countries mentioned above, please comment and let us know what
things are looking like from the inside. Newstex ID: BPUN-0001-28623752