Economic Interests

If you owe the bank £100, that's your problem. If you owe the bank £100 million, that's the banks problem.

The Economic Medals

With the Olympics coming to an end, I thought it would be in the spirit of the times to award some medals to countries based on their economic performances in 2012. With it only halfway through the year, some figures will be based on predictions for the year 2012. I will also only include modern economies, thereby discounting a lot of African countries that are heavily reliant on aid and countries in the middle east that still recovering from civil or foreign war. A trend of Asian economies succeeding goes right through the different departments, while a few countries can count multiple medals.

First up is the big one, GDP Growth – the annual increase in the market value of everything a country produces. In bronze position is Thailand with a predicted 6% growth this year, after recovering from their worst floods in nearly 70 years in 2011. Just ahead of them in silver position is India with 6.6% growth, as the country continues to expand its economy to keep up with a burgeoning population. A recent mass power cut however showed the insecurities in their infrastructure, which could possibly hurt future growth for the country. Out in front is China with 8.1% growth predicted for the year, as the country strives to surpass the USA in the record books as top dog.

1st China – 2nd India – 3rd Thailand

Graph showing China’s growth over the years. 

The next event is Unemployment, where the nations are competing on their ability to get people into work. After getting bronze in the last event, Thailand comfortably wins the gold here, with the percentage of the population unemployed at an extremely low rate of 0.9%. This is contested however with Thailand accused of not seasonally adjusting their numbers (as farmers are out of work for long periods). If that is proven correct then the current runner up, Singapore would be awarded gold, with unemployment at 2%. The government has achieved this by both having a very stringent benefits policy and by having a low population of just over 5 million. In the fight for the Bronze medal, Switzerland just beats off competition from Malaysia and Norway. With unemployment at 2.9%, Switzerland has done well by having strict visa rules which can be adjusted to help keep employment high.

1st Thailand – 2nd Singapore –  3rd Switzerland

Graph showing Thailand’s unemployment rate since 2010. 

The third event is the Current Account Balance as a percentage of GDP. This is the balance between Imports and Exports, with the best countries exporting more than they are importing, therefore having a current account surplus. After narrowly missing out on a medal in unemployment, Norway capture Bronze with a current account surplus of 14.1% of GDP. This is thanks to their vast Oil and Natural Gas resources, with global prices increasing in recent times. Ahead of them in second place is once again Singapore, who boasts a strong current account surplus of 17.9% of GDP. This is because Singapore contains the busiest port in the world, allowing the country to become a global trade hub. Taking Gold in this event is Saudi Arabia; whose enormous oil reserves (the largest exporter of oil in the world) has allowed it to build up a current account surplus of 22.7% of GDP.

1st Saudi Arabia – 2nd Singapore – 3rd Norway

Graph showing the current account balance of Saudi Arabia 

Following this is the National Budget Balancing event. In this the best countries are able to make money from tax revenues after taking away government expenditure, thereby producing a budget surplus. In Gold and Silver positions are Norway with a budget surplus of 14.3% of GDP and Saudi Arabia with a budget surplus of 11.1% of GDP. These two top the pile because of the same reason as their high current accounts, they have vast Oil and Natural Gas reserves. Unlike Singapore whose high current account came from their successful port, the exportation of raw materials has boosted Norway’s and Saudi Arabia’s budgets by observable amounts. In a far off bronze position is Chile, who government has worked well to possess a budget surplus of 1.5%. This is partly down to the efficient running of the country by the government but is also down to a rise in the copper prices, of which the Chilean economy is highly sensitive towards.

1st Norway – 2nd Saudi Arabia – 3rd Chile

Graph showing Norway’s superiority over the rest of Europe with its high budget surplus. 

Finally, to finish off the medal ceremony is the government’s 10 year bond yields. These are the interest rates that each government must pay to loan money on the international markets, where the lower the number is, the more secure international creditors believe you are. For example Spain is currently facing very high interest rates, while the likes of Greece are not even able to borrow money on the international markets (leaving them reliant of bail outs). In Bronze position, Japan is able to borrow very cheaply in the long run with interest rates at 0.81%. These figures are somewhat distorted though as the government puts pressure on Japanese banks to buy their bonds, helping to drive down the bond yield rates. In silver position, Hong Kong boasts an even cheaper rate of 0.74% on long term loans. With a AAA credit status and heavy links to China (where heavy capital controls restrict international investment) the city state has become very popular in the bond markets as a secure investment. But in Gold position and winner of the event is Switzerland with interest rates of 0.63% on long term bonds. Switzerland are treated to such low interest rates namely because of the euro crisis, as the countries surrounding Switzerland face the ever present danger of a euro collapse. Switzerland (not in the EU) is therefore seen as a safe haven in a sea of chaos called Europe.

1st Switzerland – 2nd Hong Kong – 3rd Japan

Table showing the worlds lowest bond yields on the 1st June 2012. Since then Hong Kong has overtaken Denmark and Japan into second place


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