When on the hunt for new investment ideas, macroeconomics, or the larger economic picture can often be over-looked. One source for macroeconomic analysis that provides investors with valuable insights is the Economist. In particular the "economic and financial indicators" on the back pages provide the Intelligent Investor with a wealth of information from which to make broader decisions regarding where in the world to invest your money. This week, six countries or economies stuck out to me as being particularly favourable for the enterprising investor.
The metrics I used to measure the general health of the following economies was their trade balance, current account balance, and general level of interest rates and inflation. If inflation or interest rates are out of control, they should not be considered as stable areas to invest.
1. Hungary. Hungary is poised for substantial growth when Europe rebounds from the doldrums. It has a +$9 billion trade balance, +$2.9 billion current account balance, and a budget balance of +1.9% of GDP.
2. Norway. With vast amounts of oil and natural gas wealth, Norway is poised to be a great provider of scarce resources to the rest of the world for still some time to come. It has a +$63.4 billion trade balance, +$49.6 billion current account balance, and a budget balance of +12.5% of GDP. Much like Canada in its abundance of resources, Norway has been a much better steward of its wealth for future generations.
3. Sweden. Another Nordic economy, Sweden does not benefit from the oil and gas reserves of Norway, but it has a highly skilled and educated workforce. It has a +$12.3 billion trade balance, +$32.2 billion current account balance, and a budget balance of +0.5% of GDP.
4. Singapore. With an excellent base in South-East Asia, Singapore will surely benefit from the significant growth and investment there going forward. As global trade moves eastward, Singapore has much to gain. It has a +$48.3 billion trade balance, +$52.5 billion current account balance, and a budget balance of +0.3% of GDP.
5. South Korea. Another bastion of Asian growth going forward, the South-Korean economy has been an export powerhouse for years. It has a +$40.7 billion trade balance, +$28.2 billion current account balance, and a budget balance of +1.6% of GDP. The important caveat with a country like South Korea is its low birth rate. As the people tend to focus more on consumerist elements of their society, population growth slows and future productivity can be seriously threatened.
6. Chile. The only South American country on my list, Chile is often neglected by investors due to a rough history of corrupt and inept governments. However, Brazilian consumer growth means that neighbouring markets could experience a halo effect and also gain a massive new market for their resources. It has a +$16.6 billion trade balance, +$2.4 billion current account balance, and a budget balance of +0.4% of GDP.
It is often said that a rising tide lifts all shifts. In the vein of investing, this means that the national or macroeconomic picture, if positive, bodes well for the business and investment climate in the country, and for those who invest there.