The listing was topped by Costa Rica and Nicaragua, closely followed by Chile. The decline in economic conditions in several countries during 2003, however, will affect future rankings. This is particularly true of the Dominican Republic, whose sovereign rating Standard & Poor’s recently put on negative creditwatch. The country is currently at high risk of default.
However Bolivia, Uruguay, Venezuela and Ecuador also had very weak credit profiles in 2003.
- How we did it
Countries were rated out of a potential maximum of 100. Each country scored between zero and 25 in four categories: political stability, GDP growth, financial infrastructure and exchange rate stability. Where no data were available for a particular category, zero was scored.
- Political stability
Political risk ratings for each country scored out of a maximum of 100 were obtained from Political Risk Services (see www.countrydata.com for further information). The country with the highest stability rating scored the maximum of 25 points and the one with the lowest zero; those in between scored between 1 and 24 on a pro rata basis.
- Exchange rate stability
Exchange rate stability was determined by taking the lowest average daily exchange rate against the US dollar for 2002 from the highest average daily exchange rate in the year and expressing it as a percentage of the average of the average daily rates for the year. The raw data was obtained from Oanda (www.oanda.com) and represents the average daily interbank rate. The country with the lowest variation scored the maximum of 25 points and the one with the highest zero; those in between scored between 1 and 24 on a pro rata basis.
- GDP Growth and Financial Infrastructure
GDP growth figures were determined from figures for GDP for 2001 and 2002 obtained from International Financial Statistics (published by the International Monetary Fund). The figures represent growth in local currency and are not corrected for inflation. The financial infrastructure figure was determined on the basis of the domestic credit provided from the banking sector as a percentage of GDP, taken from the same publications Banking Sector survey. The only exceptions were Costa Rica and Nicaragua, where the domestic credit was taken from the Monetary Survey. For each of these parameters, the country with the highest percentage scored the maximum of 25 points and the one with the lowest zero; those in between scored between 1 and 24 on a pro rata basis.
