[South Africa] GCR publishes country risk scores for 28 countries from across the globe
Through its interaction with the Country Risk Assessment, the Global Credit Ratings (GCR) has published country risk scores for 28 countries from across the globe.
The country risk assessment interacts with GCR ratings in four ways:
First, the country risk scores create the foundation for the Anchor Credit Evaluator;
Secondly, the country risk score/ assessment acts as an anchor to the GCR Risk Score and therefore ultimately to the GCR issuer ratings;
Thirdly, the country risk assessment acts as a hurdle (or more accurately as a series of hurdles, differing according to industry) that limits uplift away from an entity’s financial sector operating environment (the combination of the country risk score and the financial sector risk score);
And lastly, the country risk score (as a key part of the operating environment score) provides a level from which government support can be applied for each industry.
Here are the GCR country risk scores from across the globe:
Australia, Country Risk Score of 15
Australia's country risk score of '15' reflects its very high GDP per capita, strong institutions and the robust sovereign strengths of the country.
Republic of Benin, Country Risk Score of 3
Benin's country risk score of '3' balances its low wealth levels, with GDP per capita under $1,000, and fairly strong anticipated economic growth (between 5.5% to 6%) in 2019/20. GCR also takes into account the relatively good political and macro-economic stability, against other relatively weaker institutional factors. Lastly, GCR factors in a small degree of external and fiscal risks at the sovereign level.
Republic of Botswana, Country Risk Score of 9.25
Botswana's country risk score of '9.25' balances its relatively good wealth levels and strong institutional scores versus regional peers, alongside the government's strong fiscal and external positions, against the small and concentrated nature of the economy.
Burkina Faso, Country Risk Score of 3.5
The Burkina Faso country risk score of '3.5' balances the low wealth levels with solid economic growth and above average governance indicators with the ongoing security issues in the country.
Republic of Cameroon, Country Risk Score of 3.75
The Cameroon country risk score of '3.75' reflects the moderate wealth levels of the country and anticipated adequate economic growth over the next 12months. GCR also factor in relatively weak institutional strength, especially from perceptions of corruption and weaknesses in the political sphere.
Democratic Republic of Congo, Country Risk Score of 0.5
The Democratic Republic of Congo score of 0.5 reflects the very low wealth levels and weak governance, internal security concerns and the weak external position of the country.
Côte d'Ivoire, Country Risk Score of 5
The Côte d'Ivoire country risk score of '5' balances the modest wealth levels and average institutional strengths of the country versus the region, with the sustained period of very strong economic growth and the modest fiscal and external risks of the sovereign.
Arab Republic of Egypt, Country Risk Score of 4
The Egyptian country risk score of '4' reflects the GDP per capita of around 2,500 and expectations of robust economic growth (plus 5%) for the next 12-18months. It also balances the relatively large size of the market and good infrastructure with the low political stability, voice & accountability. Lastly, GCR factor in the restrained fiscal position of the Egyptian government, due to its very high levels of indebtedness.
Republic of Ghana, Country Risk Score of 3.75
The Ghana country risk score of '3.75' is supported by above average institutional strength scores for the sub-Saharan region and strong levels of economic growth, estimated to be around 7% in 2019/2020. The score is restrained by the relatively weaker external and moderate fiscal position of the sovereign, alongside the low wealth levels of the population.
Republic of Kenya, Country Risk Score of 4.5
Kenya's country risk score of '4.5' balances its position as a regional hub, the low wealth economy, with improving institutional effectiveness, high economic growth and growing fiscal pressures at the government level. GCR expect GDP per capita to range around $2,000 and GDP growth of above 5.5% for the next 12-18months.
The institutional score is supported by the vitality of the private sector, whereas politics and corruption weigh the score down. GCR believe the Kenyan sovereign’s fiscal position will continue to deteriorate over the next 12-18months, as spending increases are not matched by revenues.
Republic of Madagascar, Country Risk Score of 2.25
The country risk score of '2.25' for Madagascar balances the very low wealth levels and below institutional strengths of the country versus regional peers, with the anticipated robust economic growth in 2019 (of around 5%-5.5%) and the currently modest fiscal and external risks of the domestic sovereign.
Republic of Malawi, Country Risk Score of 1.5
Malawi's Country Risk score of '1.5' reflects the low wealth levels, and modest economic growth of the country, alongside the restrained government fiscal position against the fairly good political stability for the country versus regional peers.
Republic of Mauritius, Country Risk Score of 9.25
The Mauritius country risk score of '9.25' reflects its GDP per capita of around USD10, 000 and strong institutions in a regional context, including generally good political stability. GCR also encompass a degree of the country’s growing economic diversification and infrastructure, alongside moderately strong external position.
Republic of Mozambique, Country Risk Score of 1
The Mozambique country risk score of '1' reflects the ongoing restructuring of government bonds and related debt. However, GCR also note the low levels of wealth and moderate institutional strengths are somewhat offset by sound economic fundamentals.
Republic of Namibia, Country Risk Score of 5.75
The Namibian country risk score of '5.75', is supported by above average wealth levels and institution strengths of the country in comparison to regional peers. The scores are restrained by the weak economic performance, limited monetary policy flexibility and mounting government fiscal pressures.
Republic of Philippines, Country Risk of 9
The Philippines Country Risk score of '9' balances the large size of the market, robust economic growth and moderately strong financial position of the sovereign versus the low wealth levels and modest institutional strengths, on a global peer comparison.
Republic of Rwanda, Country Risk of 4.25
The Rwandan Country Risk Score of '4.25' balances the low wealth levels with moderately strong economic growth and above average institutional scores, underpinned by perceptions of better control of corruption than regional peers.
Republic of Sierra Leone, Country Risk of 1.75
Sierra Leone country risk score of '1.75' balances the low wealth levels, strained fiscal position of the government and moderately high external risks, with good political stability and GCR expectations of the robust economic growth over the next 12-18months.
Kingdom of Spain, Country Risk of 11
Spain's Country Risk score of '11' balances its good levels of wealth and robust institutions on a global comparison, with high domestic unemployment and the strained but improving fiscal position of the government.
Republic of South Africa, Country Risk Score of 7.5
The South Africa country risk score of '7.5' reflects GCR expectations that GDP per capita will range between US$6,000 and US$6,500 over the next 12-18months, balancing slow economic growth with stable population growth and a broadly stable local currency.
It also factors in institutional scores in the middle of the range, supported by voice & accountability and regulatory quality, macro-economic stability, infrastructure and the strengths of the financial system. Corruption and politics, innovation and health are the detracting elements of institutional strength for the country.
GCR have made a small positive adjustment to the initial score, balancing the size and diversification of the South African economy versus regional peers and strong monetary policy flexibility against the deteriorating fiscal position of the government and high profile SOEs.
Republic of South Sudan, Country Risk Score of 0
The South Sudanese country risk score of '0' reflects the very low wealth levels and governance levels of country, weak macro-economic stability and ongoing security concerns.
Republic of Tanzania, Country Risk Score of 4
The Tanzania country risk score of '4', balances a GDP per capita of around US$1,000 and recent moderate of economic performance, with average institutional strengths of the country versus regional peers.
Togolese Republic, Country Risk Score of 1.75
The Togolese Country Risk score of '1.75' balances the low wealth, moderately weak institutional scores and weakened government fiscal position with GCR expectations that economic growth will be fairly strong in 2019, at around 5%.
Republic of Uganda, Country Risk Score of 3.5
The Ugandan country risk score of '3.5' is supported by the high expected economic growth and institutional strengths in line with regional peers. The score is restrained by the low wealth levels and moderate external /fiscal pressures facing the government.
United Kingdom of Great Britain & Northern Ireland, Country Risk Score of 14
The risk score of '14' for the United Kingdom balances is status as a large, wealthy and highly diverse country with relatively large public debt and current account deficit, and moderate economic growth, alongside the unknown risks of Brexit.
United States of America, Country Risk Score of 15
The United States of America's country risk score of '15', reflects its zenith position in the global economy. The positive factors include its size, diversification and strong institutional scores, plus the role of the U.S Dollar as the premiere global currency. On the other hand, the twin deficits are high and growth is moderate, which could cause problems in the next 3 to 5 years.
Republic of Zambia, Country Risk Score of 1.75
Zambia's country risk score of '1.75' balances the above average institutional scores, supported by political stability and a long period of sustained macro-economic stability, with low wealth levels, pressure in the copper price and the increasing fiscal and external pressures facing the Zambian government and her agents.
Republic of Zimbabwe, Country Risk Score of 0
The Zimbabwean country risk score of '0', reflects the ongoing sovereign default, weak fiscal and monetary track-record, high inflation, and the risk of rapid currency devaluation. GCR note the efforts made by the current Minister of Finance to improve the fiscal position of the government and give credence to the local currency. However, the impact on inflation and economic growth will be stark in 2019, challenging political will.