The seven economic wonders of a worried world

 

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In periods of gloom like this one, when commentators see nothing but faults in most countries, it is worth highlighting the few that defy the prevailing pessimism. Here are seven that stand out in a world tipping towards recession and higher inflation: Vietnam, Indonesia, India, Greece, Portugal, Saudi Arabia and Japan. They share some combination of relatively strong growth, moderate inflation or strong stock market returns — compared with other countries. By fascinating coincidence, most of them also defy deep biases about the supposedly dim prospects of certain countries, cultures and systems. The least surprising name on my list is Vietnam, a case study in communism that works. As geopolitical tensions increase with China, western businesses are hedging their bets by adopting a “China plus one” strategy — and often the “one” extra sourcing destination is Vietnam. By investing heavily in the infrastructure required of a manufacturing export power, and opening its doors, Vietnam is growing at nearly 7 per cent, the fastest pace in the world. Criticism of the economic trials of Muslim countries long ignored the most populous one, Indonesia. Resource rich, it is benefiting from the global commodity price boom, but with a domestic market of 276mn it is not overly dependent on exports. It has unusually low debt compared with other developing economies, and an unusually stable currency in a year when most currencies are falling sharply against the dollar. The result, a benign mix of 5 per cent growth with less than 5 per cent inflation, makes Indonesia a shining example of economically adept Islam. Though India’s growth is always flattered by its low base, its economy will continue to be one of the world’s fastest growing. Policymakers have done just enough reform to draw in investors who, spooked by the regulatory crackdowns in China, are now gravitating to the second largest emerging economy. New investment in digital services and manufacturing are bearing fruit and the vast domestic market insulates India from global recession. Some of the “Pigs” — the countries at the core of the eurozone debt crisis a decade ago — are now in revival mode. Greece and Portugal have cut their government deficits by more than half, and are less exposed than most of Europe to gas supply shocks emanating from Russia. Greece is getting a boost from a revival in foreign investment — and in tourism, which Covid had cut from 20 to 15 per cent of its gross domestic product. Less than 10 per cent of bank loans are non-performing, down from 50 per cent during the crisis. Now growing at more than 4 per cent, with inflation coming down fast, Greece is enjoying one of the region’s healthiest recoveries.

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