The 10 Economies To Soar In 2014 – Part I

Todays top stocks to buyDeveloped countries are heating up global growth while emerging nations take a breather. Here are the heavy-hitters to watch for…

As the saying goes: the bigger they are, the harder they fall.

But in the case of developed countries, it should go on to say: the harder they fall, the stronger they get when they’re back on their feet.

For a number of the world’s superpowers, the global recession didn’t treat them kindly as they felt the full brunt of an economic crisis that only just began to loosen its vice-like grip.

Countries like Japan, the UK, and of course the United States were among the many developed nations that plunged into an abyss of unemployment, falling GDP, and mounting debt.

In the years that followed, investors largely avoided the big, established markets in favor of emerging countries that had significant upsides to them.

Developing nations from Latin America, Asia, and Africa were quickly identified as investment hotspots as they saw a flurry of economic activity in the years following the recession.

However, when it comes to long-term prospects, their larger and stronger counterparts are proving they are still very much in the economic driver seat.

Case in point, the World Economic Forum’s annual Global Competitiveness report surveys countries and ranks nations according to their Global Competitive Index (CGI).

The data collected is categorized into 12 pillars including health, infrastructure, labor market, and education among others.

148 countries responded in this year’s report, and a few in the top ten could come as a surprise to some of you.

In part 1 of this installment, here’s the rundown from 10th to 6th:

10) United Kingdom

The UK almost didn’t make the top ten as it slid from 8th place to 10th this year. A poor showing in macroeconomic environment and volatile financial markets highlighted this. In 2012, the UK had a fiscal deficit above 8% of GDP, and its public debt expanded a further 7 percentage points to 90.3% of GDP which places them near the bottom of this year’s respondents. Despite the negatives, it remains in the top ten by demonstrating business sophistication and maintaining one of the world’s largest markets for business. In addition, its labor market is one of the healthiest compared to other European nations.

9) Japan

Japan climbed up one spot from the previous year as the country continues to slowly unwind itself from “The Lost 2 Decades” of economic stagnation. While it may be surprising, Japan has been number one on the CGI list in business sophistication for five years running. Less surprising is in the pillar of innovation, where it ranks very high in R&D, availability of talent, research institutions, and the capacity to innovate. But Japan’s competitiveness level is hampered greatly by ongoing macroeconomic weaknesses (127th out of 142). Over the past four years, its budget deficit has averaged 10% of GDP while debt levels have hit 240% of GDP — both ratios are some of the highest in the world. Other challenges include a weak labor market and high barriers for business such as taxes and regulations.

8) Netherlands

Netherlands was up and down the last two years, having returned to the 8th spot after jumping past Germany and the US to claim 5th in 2012. The biggest impact was felt in the country’s financial markets, as concerns have risen over the stability of its banks this past year. Holland’s fiscal deficits have also been a headwind, making up 4.15% of its GDP in 2012. That said, the Dutch are in the top ten in terms of business sophistication, innovation, and harnessing new technologies. It is also solid in all areas of education, and has a strong goods market and infrastructure.

7) Hong Kong SAR

While the Netherlands dropped a few rungs, the Special Administrative Region of Hong Kong rose two to 7th. For the fourth year in a row, Hong Kong led the world in the infrastructure pillar with its impressive efficiency in transportation. It once again had a strong showing in the financial market development pillar, alongside excellent proficiency in the goods and labor markets. Room for improvement falls in the pillars of higher education and innovation, where the region lacks quality research institutions and low output of scientists and engineers.

6) Sweden

Like the Netherlands, Sweden was another European nation that fell in the rankings this year, as it drops two spots to 6th. It remains in the top ten by virtue of consistently having strong public and private institutions, along with high marks for efficient goods and financial markets. It’s first in technological readiness, with a very sophisticated business culture and is a leader in innovation. Where it saw weakness was in its labor market, yet Sweden proves it’s still one of the most productive and competitive countries in the world.

In the second part of this series, we’ll continue the rundown of the world’s most competitive countries and reveal who’s in the pole position moving into 2014.

Yours in profits,
Todays top stocks to buy
John Holt
for Top Stock Millionaire
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