For the world’s worst-performing economies, no good can come from New Year’s resolutions to do better. For many, this year is likely only bring more disappointment, economists surveyed by Bloomberg said.
Oil-rich Venezuela is likely to contract by 3.3 percent this year, the worst forecast of any of the 93 nations in our analysis, followed by junk-rated Brazil, debt-laden Greece and commodities-ravaged Russia.
The bottom 10, or the “recession club,” 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 slowed dramatically from 4 percent in the first quarter of last year 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 nation’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 does not get much better elsewhere on the continent. Brazil’s GDP forecast for this year combined with last year’s drop puts the nation in its deepest recession since at least 1901. Two major credit rating companies have already downgraded its sovereign debt to “junk” status.
Next door, newly elected Argentine President Mauricio Macri is steering the nation 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 nation’s fiscal deficit.
Greece did not get booted from the euro and managed to recapitalize its struggling banking sector, yet this year is still full of challenges. The economy is set to shrink by 1.8 percent, making the hundreds of billions of US dollars Greece still owes that much harder to pay off. Serious debt relief is likely to still prove to be elusive. Add to that the strain on its borders of migrants fleeing violence in Syria.
Russia is likely to stay in negative territory after contracting about 3.6 percent in the first nine months of last year, but could also turn the corner on what is likely to be its longest recession in over two decades. Sanctions from the US and EU 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 this year. 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.
Deflation-pained Japan is forecast to grow 1 percent this year, lagging behind many of its neighbors who made the projected list of this year’s best performers. The nation’s Cabinet recently approved a record budget for next fiscal year, betting that fiscal stimulus and labor market reform would boost growth.
Current forecasts are the median estimate from each nation’s latest survey conducted between October and December last year, bringing the total number of economies surveyed to 93.
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