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Country Risk Analysis and Managing Crisis

The team We are the ones to identify the best country to invest

Risa Hamamoto

Introduction

Carolina Dominguez Jocelyn Neri

Currency Crisis

Financial Crisis

Foreign Debt Crisis

Banking Crisis

Introduction ● New emerging markets in four anonymous countries

● Focus on crises:

○ Currency crisis

○ Financial crisis

○ Foreign debt crisis

○ Banking crisis

Country A ● Large advanced, developing country

● Economic problems in 1980s

● Economic growth is supported by the government

● Domestic investment is weak

● Inflation rate remains high

Country B ● Large industrial economy

● Significant resources including energy resources

● Private business investment is increasing

● Decrease in the governmental roles

● Political changes could impact potential growth

Country C ● Large, developing economy

● Plentiful in natural resources, but lacks the essential infrastructure

● Economy moving towards market economy

● Government has liberalized control

Country D ● Large developing economy with significant Resources

● Lacks economic infrastructure

● Moving towards market Economy

● Income distribution is widely disparate

● Government monitors consumer prices, interest rates, and

exchange rates

Crisis

● Currency

● Financial

● Foreign Debt

● Banking

Currency Crisis

● Currency is attacked and depreciates

sharply.

● Government raises interest rates or

spends from the international reserves

Currency Crisis

Financial Crisis

● Financial institutions or assets are overvalued

Financial Crisis

Foreign Debt

Crisis

Country cannot service its foreign debt

● Capital Accounts

● Net Portfolio Investment

Capital Account

Financial asset

Current account

Foreign direct investment (FDI)

Percentage economy becomes

volatile

Percentage economy is growing and

more likely stable

Net Portfolio Investment

Expectation of earning a return

Significant portion of infrastructure

assets

Higher return on investments

Lower return on investments

Foreign Debt Crisis

Banking Crisis

Occurs when banks in a country are in

serious solvency or liquidity problems at

the same time.

● Investment

● Lending Rates

Banking Crisis

Conclusion

Analyses:

Country A:

Financial crisis

Country B:

Private sector investment looks promising

Government involvement and foreign

investment low

Country C:

Good long-term investment

Country D:

Quick and successful investment

GDP rising, interest rates falling

Least Likely <------------------------------------------------------------------------------------------> Most Likely

Imports

Exports

Government

Consumption

Investment

Country D