The Worst Economies In The World

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Photo: AP Images

Recently, we highlighted the world’s fastest growing economies. Many were developing nations in rapidly growing areas like parts of Africa and Southeast Asia.On the other side of the coin are the sluggish economies. They include dysfunctional countries with weak leadership, debt-laden countries with limited financial flexibility, and developed countries that are just too big to grow quickly.

We took a look at the IMF’s growth forecasts broken out by country and identified the 15 that are projected to grow the slowest over 2013-2014.

#15: Denmark +3.0%

Est. 2012 GDP: +0.5 per cent

Est. 2013 GDP: +1.2 per cent

Est. 2014 GDP: +1.8 per cent

Economy: Denmark has relatively low debt and deficits but is suffering from the effects of the euro crisis. However, the Danish krone is appreciating rapidly due to its perceived status as a relative 'safe-haven' asset. This and high exposure to the eurozone via trade channels means exports are deteriorating and manufacturing is showing weakness.

Source: International Monetary Fund

#14: Iran +2.9%

Est. 2012 GDP: +0.4 per cent

Est. 2013 GDP: +1.3 per cent

Est. 2014 GDP: +1.7 per cent

Economy: Iran's economy is extremely dependent on oil exports. International sanctions against Iran -- led by the United States and European Union -- emanating from concerns over the development of their nuclear program have caused Iranian exports of oil to plummet 40 per cent year over year and the Iranian rial to free fall 50 per cent in 10 months.

Source: International Monetary Fund


#13: France +2.9%

Est. 2012 GDP: +0.5 per cent

Est. 2013 GDP: +1.0 per cent

Est. 2014 GDP: +1.9 per cent

Economy: France has been dealing with a long term decline in competitiveness as evidenced in its decreasing share of global exports over the years. Austerity measures put in place as French leaders try to reduce fiscal deficits against a euro crisis backdrop do not improve the outlook for the French economy.

Source: International Monetary Fund


#12: Germany +2.8%

Est. 2012 GDP: +0.6 per cent

Est. 2013 GDP: +1.5 per cent

Est. 2014 GDP: +1.3 per cent

Economy: The German economy is beginning to show weakness as growth continues to slow in the broader eurozone, meaning less demand for imported goods from Germany. Germany's growing level of exposure to peripheral economies via various bailout mechanisms and fiscal transfers is causing concern as well.

Source: International Monetary Fund


#11: Cyprus +2.6%

Est. 2012 GDP: -1.2 per cent

Est. 2013 GDP: +0.8 per cent

Est. 2014 GDP: +1.8 per cent

Economy: Cyprus has come under serious pressure as a result of the unfolding euro crisis due to its banking system's heavy financial exposure to Greece. A large deficit due to expansionary fiscal policy in recent years has put pressure on funding the government, and now Cyprus may soon join Greece, Portugal, Ireland, and Spain in requesting a bailout from troika creditors.

Source: International Monetary Fund


#10: Greece +2.6%

Est. 2012 GDP: -4.8 per cent

Est. 2013 GDP: +0.1 per cent

Est. 2014 GDP: +2.6 per cent

Economy: Greece is the euro crisis poster child. Austerity measures forced upon Greece by the troika of creditors (the IMF, ECB, and EU) are taking a serious toll on the Greek economy as the government quickly runs out of cash to pay its bills, including public salaries. The underlying lack of competitiveness of the Greek economy provides for a bleak growth outlook.

Source: International Monetary Fund


#9: Croatia +2.5%

Est. 2012 GDP: -0.5 per cent

Est. 2013 GDP: +1.0 per cent

Est. 2014 GDP: +1.5 per cent

Economy: Croatia, while not in the euro, is an EU member and is highly exposed to the eurozone through trade and bank funding channels. Eurozone bank deleveraging and a decrease in imports across the region is causing strains on Croatia, which is also dealing with a troubling fiscal situation in the wake of a few years of recession.

Source: International Monetary Fund


#8: Portugal +2.5%

Est. 2012 GDP: -3.3 per cent

Est. 2013 GDP: +0.4 per cent

Est. 2014 GDP: +2.1 per cent

Economy: Portugal has been locked out of the capital markets and was forced to go to the European troika last summer for a 78bn euro bailout. While the country is making progress on austerity targets set by the IMF, ECB, and EU as part of the deal, Portuguese unemployment remains high (currently over 15 per cent) and the euro crisis is having a negative impact on growth across the region.

Source: International Monetary Fund


#7: Jamaica +2.2%

Est. 2012 GDP: +1.0 per cent

Est. 2013 GDP: +1.1 per cent

Est. 2014 GDP: +1.2 per cent

Economy: Jamaica is dealing with sustained high unemployment and low growth in the wake of the 2008 financial crisis. Large deficits and a substantial debt overhang are putting fiscal pressure on the Jamaican economy, while its banking sector battles with a high percentage of bad loans that have caused credit growth to contract over the past few years.

Source: International Monetary Fund


#6: Netherlands +2.2%

Est. 2012 GDP: -0.5 per cent

Est. 2013 GDP: +0.8 per cent

Est. 2014 GDP: +1.4 per cent

Economy: The Netherlands has stable inflation and low unemployment -- the latter especially relative to much of the rest of western Europe. However, deep trade linkages with the rest of the eurozone has tipped the economy into recession, and slow growth could result for some time as the euro crisis plays out.

Source: International Monetary Fund


#5: Belgium +2.1%

Est. 2012 GDP: +0.0 per cent

Est. 2013 GDP: +0.8 per cent

Est. 2014 GDP: +1.3 per cent

Economy: Belgium is another eurozone country feeling the effects of the euro crisis via trade and financial channels; it also remains burdened by relatively large debt and deficits, making it a potential victim of funding stress should the crisis worsen. Ratings agencies Standard & Poor's and Moody's downgraded Belgium's credit rating at the end of last year, the latter citing among other things 'its banking system, particularly the potential contingent liabilities stemming from a bailout of Dexia bank.'

Source: International Monetary Fund


#4: Spain +1.3%

Est. 2012 GDP: -1.8 per cent

Est. 2013 GDP: +0.1 per cent

Est. 2014 GDP: +1.2 per cent

Economy: Spain's banking sector is hampered by insane amounts of exposure to the country's housing market, a bubble that has burst in a similar fashion to that in the United States. A recently announced troika bailout of the Spanish banking system has been delayed until mid-2013, offering little hope that increased bank lending will help stimulate the real economy any time soon.

Source: International Monetary Fund


#3: Italy +0.2%

Est. 2012 GDP: -1.9 per cent

Est. 2013 GDP: -0.3 per cent

Est. 2014 GDP: +0.5 per cent

Economy: Italy's large debt overhang in the midst of the euro crisis has provided the impetus for extensive austerity measures to be implemented by Italian prime minister Mario Monti, who leads the country's technocratic government. As markets react to the troika bailout of the Spanish banking sector by selling Spanish sovereign bonds, many fear Italy could be next in the euro crisis spotlight soon.

Source: International Monetary Fund


#2: Swaziland -0.6%

Est. 2012 GDP: -2.7 per cent

Est. 2013 GDP: -0.9 per cent

Est. 2014 GDP: +0.3 per cent

Economy: Swaziland is suffering from an acute fiscal crisis and its banking system's heavy exposure to the government through sovereign bond holdings is wreaking havoc on the private sector. Lack of government funds to combat common third-world problems like poverty and AIDS weighs negatively on the economy as well.

Source: International Monetary Fund


#1: Sudan -0.9%

Est. 2012 GDP: -7.3 per cent

Est. 2013 GDP: -1.6 per cent

Est. 2014 GDP: +0.7 per cent

Economy: Sudan is dealing with the effects of years of civil war that culminated in a secession of the southern part of the country last summer, taking 80 per cent of the country's oil reserves with it. High inflation (currently running around 19 per cent) means real GDP growth is low.

Source: International Monetary Fund


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