Which are the remaining economically underrated countries?

by on December 29, 2012 at 12:40 pm in Current Affairs, Economics | Permalink

We read about the Philippines in yesterday’s FT:

Last quarter, its economy again surprised on the upside, growing 7.1 per cent and notching up its 55th straight quarter of growth. It now seems to be growing at a steady 5-6 per cent, despite an adverse external environment, against a lowly 3 per cent in the 1990s. The finance ministry believes the potential growth rate can be lifted to 6-7 per cent and eventually to 7-8 per cent.

…The stock market, one of the world’s best-performing in 2011, is up 32.5 per cent in the year to date in peso terms. That makes it the world’s fifth-best performing index. The peso itself has strengthened 7 per cent against the dollar. There is even talk of new investor interest in manufacturing. Japanese companies, looking for an alternative to China, have been nosing around. Philippine exports, not as important to the economy as for many Asian countries, have held up well in spite of falling demand for electronics, suggesting a degree of diversification.

Mexico is now also widely recognized as doing quite well.  So from the earlier list of undervalued countries, it seems all the pressure is on Pakistan.  Please keep in mind, the place need only outperform the expectations.

1 Rahul December 29, 2012 at 1:34 pm

What about Indonesia / Vietnam / Burma / Sri Lanka? Or are the expectations already suitably high there?

2 DK December 29, 2012 at 2:09 pm

Mexico is doing quite well? What exactly is your definition of ‘well’? Go to Yucatan just outside resort areas and see the majority of population living in what can only be described as abject poverty.

3 Emil December 30, 2012 at 9:00 am

growth rate and absolute level is not the same thing.

Europe is doing very badly in terms of growth rate but very well in terms of absolute level

4 Tyler Cowen December 29, 2012 at 2:09 pm

Sri Lanka maybe a good pick, but the others are all capitalized in the court of informed opinion, I think.

5 Bill December 29, 2012 at 2:35 pm

The United Nations and the Vatican

Both produce bureaucratic output and rely upon the kindness of strangers.

6 Bill December 29, 2012 at 2:37 pm

They also produce postcards and guided tours.

7 Thor December 29, 2012 at 3:27 pm

Sold! Where do I send my cheque?

8 Mark Thorson December 29, 2012 at 3:16 pm

On Nightly Business Report last night, the guest was plugging Cuba as having the potential for sudden positive change. Both Obama and Kerry are in favor of dropping the embargo against Cuba. The guest on NBR was recommending shipping companies, cruise lines, and an air-conditioning company as potential beneficiaries of a new policy on Cuba.

9 Steve Sailer December 29, 2012 at 4:20 pm

Cuba has a lot of potential advantages.

10 DJ December 29, 2012 at 3:56 pm

That’s nice. . But, what is currently behind the ‘reported’ upticks? And, are all of these growths Natural from freer trade and markets, or the work of distortions by GOVT manipulations with an inevitable tumble down a mtn side. I am not trying to be a Negative Nelly, only skeptical in light of the worldwide cronyism by govts and their meddlings.

11 Ed December 29, 2012 at 5:07 pm

What about Japan?

Should we be thinking about unexpected potential for more growth than average, or in terms of less downside as the world economy stagnates or contracts?

12 DocMerlin December 29, 2012 at 6:47 pm

“Which are the remaining economically underrated countries?”

From this I take it, that Tyler doesn’t believe in the efficient market hypothesis?

13 msgkings December 30, 2012 at 12:24 pm

Of course he doesn’t, he has an IQ over 100

14 David Roth December 29, 2012 at 8:43 pm

Why not just look at a list of stock market returns as a proxy for how expectations of economic success changed over the course of the year?

15 Bill December 29, 2012 at 9:08 pm

Good point, but there is also a problem of disentangling a few things if you use stock markets as a proxy. One is that stock valuations are a function of local savings and permissable savings outlets, local stock regulation (do you value a stock high or low if there is poor financial regulation and no protections against manipulation, or poor disclosure requirements), and rules regarding treatment of minority public owners.

16 farmer December 30, 2012 at 1:49 am

Iraq has been outperforming it’s expectations for years now. The Iraqi bourse is doing very well and, for the moment, some semblance of stability exists. I don’t want to turn this into a GWB-based discussion, but the Iraqi economy is doing so well as to be unthinkable by 2007 standards

17 rec1man December 30, 2012 at 3:07 pm

The long term economic growth rate = Savings rate / 5

For India , savings rate = 35%, long term growth rate = 7%

For Pakistan, savings rate = 10%, long term growth rate = 2%

In Pakistan, anyone saving is ridiculed as a stingy miserly Hindu

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