With the economic crises around the world making the news daily, financial experts have been analysing the impact and implications in the world’s economies. One of the world’s leading financial management and advisory companies, Merrill Lynch has compiled a report, Global Economics, following several data requests from clients of the investment bank for key risk indicators for all major economies including Europe, the Middle East and Africa (EMEA).

The risk ranking was based on seven indicators which include current account financing gap, foreign exchange reser-ves/short-term external debt ratio, private credit-to-Gross Domestic Product (GDP) ratio, and private credit growth, loans to deposits and banks capital-to-assets ratio.

The Statistics

The report showed that Nigeria is the least vulnerable economy in the world. According to the statistics, Nigeria, with a population of 141.41million, was able to record a 7.3 per cent growth in GDP, with its Consumer Price Index hovering at 11.5 per cent, its current account balance, fiscal balance and public debt at 6 per cent, 6.3 and 10.4 percentage respectively.

To determine its external vulnerability, Nigeria’s external debt position was put at 12.9 per cent of the GDP, while external debt /exports ratio was put at 9 per cent. Her forex reserves totalled $60.8billion.The percentage of Nigeria’s total external debt in relation to the GDP was put at two per cent, total foreign claims is $15.3billion while international claims stood at $13.1billion.

The report stated that the percentage of Current Account Balance plus net Foreign Direct Investment of the Nigerian GDP was 34, Forex reserves/short-term external debt totalled 41, while percentage of export of the GDP was 38 point. The percentage of private credit of GDP was 43, while the percentage of bank capital to assets, according to Merrill Lynch was 41.

The Economies

The world’s 10 least vulnerable economies are Nigeria, Mexico, Phili-ppines, Colombia, Egypt, Oman, Indonesia, Peru, China and Russia. While the world’s 10 high-risk economies are Australia, Switzerland, Korea, Romania, Hungary, Sweden, Bulgaria, Euro area, United Kingdom and the United States of America.

The 10 most vulnerable countries, which are mostly European countries, were said to have exhibited worse balance of payments positions, stretched external debt service ratios and overleveraged financial systems.

Merrill Lynch states “Many of the economies that top our risk ranking have been identified by the National Bureau of Economic Research (NBER) as those that have experienced capital flow bonanzas in the past five years and hence exhibit higher likelihood of economic crisis.”

The Indicator

It was noted that the key indicator to the safety of investment in Nigeria is the freedom to invest in any part of the country without government’s intervention. The Director-General of the Nigerian Economic Summit Group (NESG), Mazi Sam Ohuanbuwa stated, “In Nigeria, people can invest anywhere without hindrance.  Other important considerations are the sheer size of the Nigerian market and underlying macro-economic issues.”

The Future

With a healthy foreign exchange management, low budget deficit and heavily low external indebtedness, Nigeria is poised to attract more investors. Although the cost of doing business in Nigeria is high compared to other economies, the level of risk is far lower than what is obtainable in some other economies of the world.

Nigeria is the 38th-largest economy in the world and 137th based on per capita GDP of $2027 a year.  Perhaps, the Vision 2020 program would see Nigeria becoming one of the 20 largest economies in the world.