Last June, World Trade ranked the top 30 countries for trade and expansion using a variety of data such as domestic demand, stock market capitalization, and political risk. We've revisited those countries, added 20 more to the list, and summarized the economic outlook for this year. In addition, we've assigned each country a grade. Although we chose not to rank each country this time, the World Economic Forum's Global Competitiveness Report 2000 (see table) provides an interesting comparison to our analysis.

Argentina: B

Despite the best efforts by president Fernando de la Rua, Argentina has yet to recover from the economic doldrums that have plagued the country for the past several years. Further, Brazil's devaluation in 1999 continues to hamper business growth in Argentina, and unemployment is rising. Investor pessimism has caused money to be diverted to the healthier economies of Brazil and Mexico. There is hope that De la Rua's commitment to maintaining fiscal balance and pressing ahead with reforms will eventually bring Argentina some much-needed relief.

Australia: B

While there is definitely good news to report on Australia, the overall economic data from the last half of 2000 was not quite as good as analysts had wished. The Olympics, too, did not entirely meet expectations for an economic boost. Meanwhile, the Australian dollar hit a record low against the US dollar in September with an exchange rate of A$1.82:US$1. On the positive front, the country's exports are very strong; in part because its trading partners are doing well, combined with higher commodity prices.

Austria: B+

The Austrian government, hit with sanctions by the EU last year over human rights concerns, was given a reprieve in September following a recommendation by a panel of EU experts. The report, although generally favorable, nonetheless expressed doubts over policies put forth by the right-wing ruling coalition partner, the Freedom Party. Looking ahead, Austria may again find itself in hot water if it resists EU enlargement by such states as Hungary, the Czech Republic, Slovakia, and Poland. Ironically, the country would likely benefit from enlargement, yet some citizens fear an influx of cheap labor and increased crime. GDP growth is likely to rise slightly to 3.1% this year, while inflation will expand a bit to 1.7%.

Belgium: B+

Belgium's very strong economy has resulted in a lowering of the personal income tax-one of the highest in the EU. The cuts will occur between 2001 and 2003. The country is forecast to attain a budget surplus in 2001, which will help quicken the pace of lowering the national debt. Other positive trends include a low unemployment rate, strong export activity, and vibrant consumer spending. One of the few worrisome spots is a rising inflation rate brought about by the weak euro and higher oil prices.

Brazil: B+

Economic conditions in Brazil should remain favorable this year, aided by strong trade flows, improving consumer demand, and reforms in the country's stock-exchange rules. GDP growth is forecast to expand by 4% this year, slightly ahead of last year's 3.3% growth. Inflation should ease to 5.5% in 2001, lower than last year's 6%. President Fernando Henrique Cardoso, meanwhile, continues to suffer from unfavorable public approval ratings, mostly because of his apparent association with corruption charges. Last September, Eduardo Jorge, a presidential aide, was charged with involvement in the misuse of $1 million that had been earmarked for the construction of a new regional labor tribunal building.

Canada: A-

Although he had until mid-2002 before calling a new election, prime minister Jean Chretien called a general election last November in hopes of capitalizing on the country's robust economy and therefore securing a victory for his Liberal party. Meanwhile, exports of Canadian products such as electronic equipment and auto parts, especially to the US, will help maintain economic growth, which should reach 3.6% this year, down from last year's 4.3% GDP expansion.

Chile: A-

The economic outlook for Chile remains very good this year, following GDP growth of an estimated 5.6% in 2000. Gains made in the hydroelectric energy, transportation, communications, agriculture, and fishing sectors were important factors in boosting the economy last year, while investor confidence will continue to enhance Chile's overall economic health in 2001. The government is also working toward eliminating capital gains taxes for foreign investors, which will naturally make the country more attractive. Similar to most countries, however, Chile must contend with the effects of high oil prices and the downward pressure they exact on the economy and business.

China: A-

China will probably join the WTO this year after months of negotiations with trade partners to finalize the required bilateral agreements. Although Beijing has undertaken a series of reforms in preparation for WTO membership, some industrialized nations contend that the government still has a way to go before the country is on par with global trade partners. Meanwhile, China has begun a three-year program to deregulate its interest-rate system, which should result in capital account liberalization. Since September, banks have also had greater control in setting foreign-currency loan and deposit rates, which should stem the flow of moving foreign currency abroad to take advantage of higher rates.

Czech Republic: B-

Despite three years of recession, the Czech economy has finally begun a turnaround. Reforms, prompted in part by the EU's requirements for membership, have helped the Czech Republic improve its economy. The country also has one of the most advanced economies among Eastern Europe, with the second-highest per capita income in the former communist bloc after Slovenia. Exports are growing in such sectors as automobiles, electrical and electronic equipment, and steel.

Denmark: B+

Danes' decision to reject adoption of the euro last September was a personal blow to Prime Minister Poul Nyrup Rasmussen. While the prime minister may now decide to resign, the economic outcome for Denmark is likely to be characterized by higher interest rates, pressure on the krone, and a reduction in foreign investment. Economic indicators are forecast to remain relatively unchanged for 2001, with GDP growth estimated at 1.9%, inflation at 2.4%, and unemployment at 5.4%.

Egypt: B

Although the Egyptian economy is likely to expand by a percentage point this year, from 4.1% to 5.1%, a slowdown in capital inflows, stagnating privatization, and weak capital market activity are putting a damper on an otherwise optimistic economic outlook. Monetary officials, meanwhile, say they are planning to introduce a new exchange-rate regime that would probably be a crawling rate pegged to the euro. If this policy were instituted, the manufacturing sector would finally get some relief after suffering the effects of the overvalued currency.

Finland: B+

GDP growth in Finland should amount to about 4.5% this year, down from last year's estimated 5.2% growth rate. Other economic factors forecast for 2001 include a 2.3% inflation rate and an 8.6% unemployment rate, both of which are lower than last year's figures. In fact, the unemployment rate is somewhat deceiving, as there actually exists severe labor shortages in many Finnish cities, particularly in the construction and information-technology sectors. Meanwhile, the government's proposed budget for 2001 includes more generous income tax cuts, which should further bolster the already strong domestic-demand conditions.

France: B+

The French government's strong socialist underpinnings have begun to give way to a more centrist stance, bringing with it a move toward more free market policies. For instance, Finance Minister Laurent Fabius last August announced the biggest tax-reduction package in 50 years, including a lowering of income taxes and a cut in the tax levied against corporate profits. The corporate profit tax has been dropped to 33.3%, a rate that is in parity with other EU members. GDP growth and inflation rates for 2001 should remain relatively unchanged from last year, settling at an estimated 3.4% and 1.5% respectively.

Germany: B+

The government is set to implement an income and corporate tax reform package, one of the most far reaching in Germany in 50 years, which will help further the country's healthy economy this year. German businesses are also undergoing a variety of reforms, including modernization of management methods and the sale of non-core operations. Investment in new technologies is quickening, which analysts say will have positive implications for Germany's productivity and long term growth prospects.

Greece: B-

Greece joins Euroland in January 2001, which in turn will bring about changes to the economic landscape. Under its new euro zone responsibilities, the Bank of Greece must align the country's interest rates with those in Euroland. The government is also under pressure to constrain expenditure and ensure fiscal consolidation to maintain price stability. In addition, now that EU subsidies will be scaled back, Greece must improve its efforts toward fiscal prudence, more flexible labor markets, and more competitive exports.

Hong Kong: A-

Hong Kong's positive economic performance, centered on a GDP growth rate of 8.5% last year, should remain intact this year as the country continues to benefit from vigorous trade activity and political stability. The continuing regional recovery from the Asian financial crisis is also contributing to Hong Kong's bright economy. Meanwhile, foreign investment will also remain strong in 2001.

Hungary: A-

The expanding economy in Hungary may be too much of a good thing, prompting some to caution that the economy is in danger of overheating. Nonetheless, the National Bank of Hungary is poised to take action in the form of an interest-rate hike, if necessary. And such diligence in keeping inflation at bay will be rewarded as Hungary continues to position itself for EU membership. Meanwhile, the World Economic Forum's Global Competitiveness Report for 2000 ranked Hungary 26th in the world-quite an achievement considering some EU members were in close company. The report ranked Spain 27th, Italy 30th, and Greece 34th.

India: B-

India's economic growth has undergone some turmoil in recent months because of such things as higher oil prices, a falling rupee, and higher interest rates. Higher oil prices alone have been a considerable drag on the economy, given that India imports three-quarters of its annual crude requirement. There is mounting concern that India's growing fiscal deficit could further disrupt the economy, especially if it sets off inflationary pressures and another interest hike.

Indonesia: D

The political and economic upheaval that has plagued Indonesia shows no sign of dissipating any time soon. Ironically, the high oil prices that have exerted downward pressure on many other countries' economies has been one of the few bright spots for Indonesia, Asia's largest oil producer. Nonetheless, high political risk, lagging policy reforms, and dwindling foreign investment has prompted some to simply call the country "out of control."

Ireland: B+

Inflation is Ireland's biggest threat right now, fed by a galloping economy, insatiable domestic demand, and labor shortages, especially in the unskilled sector. Furthermore, the European Central Bank has warned Ireland that its planned tax cuts will only prove to exacerbate the situation. Inflation worries will begin to subside, however, if the euro posts a recovery as expected and oil prices start to ease. The strong inflows of foreign direct investment, which contributed to inflation fears, are likely to be curtailed a little this year.

Israel: B

Private consumption in Israel is leading a rebound in the country's economy. Better yet, the trend has thus far not led to higher inflation. The dark cloud, though, is the fractured peace agreement with Palestine. The degree to which the renewed fighting affects the economy and business is debatable, but most would agree that even the perception of increased risk is undesirable.

Italy: B-

Italy's economy performed well in 2000, and the outlook remains positive for 2001. Consumer confidence is very strong and spending should stay healthy with the help of new tax cuts. Italian exports are also enjoying a high level of demand. GDP growth is forecast to inch slightly higher this year, up to 3.2% compared to last year's 3%. Inflation is estimated at 2.5% for 2001, while unemployment should fall slightly to 10.4%.

Japan: C+

Japan's emergence from the economic doldrums has not been a smooth one, and the road ahead looks just as choppy. The government's sizeable public debt has been a concern for a while, prompting credit-rating agencies to downgrade the country over the past 12 months. Meanwhile, the number of corporate bankruptcies hit 1,704 last August, a 21.5% increase over the previous year. The trend should continue upward as more companies struggle to pay back funds borrowed from the government. GDP growth for Japan is forecast for 1.1% this year, down a bit from last year's 1.5%.

Jordan: B

Similar to many Gulf region economies, Jordan has benefited in recent months from higher oil prices. Oil revenues, combined with income from tourism and remittances from Jordanian expatriate workers are all working to keep the country's economy in high gear. Meanwhile, the US-Jordan free trade pact, set to be finalized early this year, is expected to positively affect Jordan's business climate while at the same time attracting increased foreign investment. A rise in Mideast tensions, though, could have a negative bearing on Jordan's economy.

Kuwait: B

Higher oil prices have naturally boded well for the Kuwaiti economy, yet the government is concerned, and rightly so, that a drop in global demand for oil would leave the government massively overextended in terms of its fiscal position. To offset overexposure, the government must boost private sector growth. While the government has begun to focus on creating jobs in the private sector, its success in this endeavor has yet to be determined.

Malaysia: B-

Inflation should remain steady in Malaysia this year at an estimated 4%, although GDP growth is expected to fall from 8% in 2000 to 5.5% this year. Foreign direct investment is sluggish in Malaysia, and may in part be caused by concerns over the country's political climate. Furthermore, the trend is reflective of FDI inflows throughout Southeast Asian countries, which have experienced a downturn the past 12 months as investors have focused more on North Asia, Europe, and the US.

Mexico: A-

Incoming president Vicente Fox has already signaled his intent to try to slow the growing Mexican economy-welcome news to foreign investors. In particular, Fox's economic advisors said the president wants to slow growth to between 4% and 4.5% this year, while at the same time halving the budget deficit through spending cuts. It appears that Fox has cross-party support to get his initiatives passed, which is necessary because his National Action Party (PAN) lacks a congressional majority.

Netherlands: A-

Inflation concerns are keeping the Netherlands' otherwise rosy economic outlook in check. In particular, high oil prices coupled with the weak euro are the primary worries, and, to a lesser degree, a tight labor market. The export sector has been doing well, however, and should remain strong throughout 2001. Growth in the country's GDP is forecast to hit 3.2% in 2001, while unemployment is expected to expand slightly to 3.4% from last year's 3.2%.

New Zealand: B

New Zealand's newly implemented Employment Relations Act is expected to have a negative effect on the economy, mostly because the power of trade unions will be enhanced through the reinstatement of collective wage bargaining. The new legislation therefore has the potential to stall the promotion of flexible working practices and reduce productivity gains. Inflation may also be on the rise because of higher oil prices, a significant jump in excise taxes on tobacco, and a historically weak exchange rate.

Norway: B

Norway's galloping economy may be headed for overheating, fuelled in large part by the country's petroleum sector. The central bank, however, is keeping a close eye on inflation, raising the deposit rate to 6.75% last August, following a previous increase in June.

Pakistan: C-

The outlook for Pakistan remains tentative, given the still-fragile state of political and economic affairs. Pakistan's high credit risk is hurting its prospects for obtaining future loans from the IMF and other lenders. In particular, Pakistan is hoping to secure a $500 million to $700 million loan from the IMF for disbursement over this year, which many say is sorely needed to help stabilize the economy and boost foreign exchange reserves. One bright spot is the government's revamp of its tax-collection system. The previous system was so poor that fewer than one in 100 Pakistanis paid any income tax.

Panama: B-

Although a slowdown in consumer credit and higher oil prices put a damper on GDP growth in 2000, Panama's pursuit of foreign trade opportunities will help to boost GDP growth to an estimated 3.7% this year. Specifically, Panama has begun free-trade talks with Caricom, the Caribbean Community trade bloc, while ministers from Guatemala, El Salvador, Costa Rica, Honduras, and Nicaragua are working on compiling a list of duty-free goods and services for the Central American Common Market (MCCA).

Peru: C

The political uncertainty that hangs over Peru will slow economic activity until elections to replace president Alberto Fujimori are completed. Last October, Fujimori indicated that the elections would occur within the next six months. Depending upon his successor, even then political and economic stability is not a guarantee. In recent years, consumption and consumer spending have slowed, as has foreign investment. Meanwhile, the country's stock market and currency both dropped to historic lows in late September.

Philippines: B-

Similar to Peru, political tensions in the Philippines have hurt the economy and damaged short-term prospects for recovery. Since taking office several years ago, president Joseph Estrada has been implicated in a number of scandals. One of the most serious, involving allegations that he received $8.6 million in payoffs from illegal gambling, has resulted in articles of impeachment being issued by the house of representatives. A trial in the Senate follows, but, says Alex Magno, an opponent of the president, "if there isn't enough pressure from the streets, Estrada won't be convicted." GDP growth is forecast to remain at 3% this year, while inflation is expected to rise to 6%.

Poland: B

President Aleksander Kwasniewski's reelection last fall was seen as a positive sign of Poland's new political maturity. Although his reforms of the health service, education system, social security, and local government have not been popular, they are necessary if Poland is to keep moving forward in negotiations to join the European Union. Indeed, while support for EU membership has fallen following the pains brought on by reform, a clear majority still favor joining.

Portugal: B+

Portugal's bubbling economy is likely to slow to a simmer on the heels of slower disposable-income levels and weaker demand for household credit. Strong exports are helping to sustain the underlying strength of the economy, and their strength is expected to continue that sustainment in the face of increased demand, coupled with the weak euro. The government, meanwhile, is under pressure to lower the fiscal deficit according to its obligations under Euroland's Stability and Growth Pact. The pact requires euro zone members to reduce their budget deficits to 1.5% in 2000 and 1.1% in 2001, resulting in fiscal balance by 2004.

Saudi Arabia: B

Middle Eastern economies such as Saudi Arabia's profited from last year's rise in oil prices. In that country, the value of exports is estimated to have increased 32% because of oil revenues. Although GDP growth will probably settle at 4.5% for 2000, this year's figure should decrease to around 3%. More relaxed foreign investment rules are going to be implemented, and should result in more privatization and private sector growth. In particular, the Saudi government plans to lower corporate tax assessed on foreign firms to bring it in line with the rate charged to Saudi companies, while also permitting majority foreign ownership of local firms.

Singapore: A-

GDP growth in Singapore was impressive in 2000, with the government upwardly revising its forecast from 7.5% to 8.5%. For 2001, growth will drop somewhat to around 6.5%. Strong external demand has played a significant part in growing Singapore's economy, with exports enjoying greater market share in such countries as Japan and the US. Inflation will remain relatively low, at approximately 2.3% this year, with the help of low food prices and deregulation of the country's telecom industry.

Slovenia: B

Slovenia's economy will continue with modest improvements this year, helped largely by export demand, in particular from the EU. In fact, trading terms with Slovenia are among the most liberal in Eastern Europe, with many companies trading on open account. Unemployment has steadily declined and should fall to 8% this year, following last year's 10% rate and 1999's 12% rate. Inflation is estimate to drop slightly to 7% this year, while GDP growth will slow somewhat to 4%.

South Africa: C+

In South Africa, President Mbeki's government must assume some responsibility for stagnant economic growth and dismal foreign investment over the past year. Furthermore, the president has been at odds with the country's trade unions over a series of labor reforms announced last July. The course Mbeki will take this year and its bearing on the economy remains to be seen, but so far many are not too optimistic.

South Korea: B

The economic reforms begun over the past few years have helped South Korea emerge from the Asian financial crisis, yet some experts say the process has not gone far enough. The country's chaebol, or large conglomerates, have been particularly hard hit by the reforms and in many ways are still struggling with the changes. Tighter credit conditions and higher interest rates will make it harder for South Korean companies to raise funds, which is especially troubling because many companies are already borrowing to meet their interest obligations.

Spain: B

Spain's economy is on track to sustain moderate growth this year, with domestic demand providing the backbone for growth. Furthermore, rising job growth and tax revenues will position the government to eliminate the fiscal deficit in 2001. Spain will therefore meet its requirements under Euroland's Stability and Growth Pact ahead of schedule, and can then look toward dealing with the government's higher health and pension expenditures. Meanwhile, continued fighting between the ETA (the Basque separatist group) and the government led by Prime Minister Jose Maria Aznar undermine Spain's country-risk environment.

Sweden: B+

Economic conditions remain bullish in Sweden, with GDP growth expected to hit 3.5% this year, down one percentage point from last year's 4.5%. Adding to the positive conditions are a falling unemployment rate, which has effectively been halved since 1997. Inflation shouldn't be a threat, and should rise only slightly this year to 2%. Whether Sweden will adopt the euro remains to be seen, even though approximately 80% of the citizens expect the country to join the euro zone within the next five years.

Switzerland: B+

Economic conditions in Switzerland should stay quite positive this year, with strong domestic demand, industrial output, and export growth leading the way. These strengths have helped lower the country's unemployment rate, which stood at 5.2% in 1997, to 2.2% last year. Although full EU membership will not happen in the near future, ties with the EU have been boosted by a series of bilateral accords that promise closer economic integration.

Taiwan: B+

The electronics sector continues to be the backbone of Taiwan's economy, with high-tech products accounting for more than 30% of the country's exports. More traditional industries, though, are still adjusting to reforms brought about by the Asian financial crisis, while at the same time dealing with a skilled-labor crunch. Nonetheless, the impending accession to the WTO and leadership of President Chen Shui-bian are both bright spots that will help keep Taiwan's economy stable and productive.

Thailand: B-

Although Thailand has done well in pulling itself out of the Asian financial crisis, many rural people have yet to realize the turnaround. Rice cultivation is the foundation of rural Thailand, where the industry supports over 15 million people. But selling prices have fallen sharply while the costs of cultivation have risen. Meanwhile, jobs in the city, which many farmers had counted on to supplement their incomes, have become harder to find. The situation has led many to call for a political change, which may just be in the works.

Turkey: C

While exports are still one of the main engines driving Turkey's growing economy, future growth is likely to be more broad based, and therefore more stable as the country will be less reliant on global demand. Meanwhile, foreign investment flows are relatively good, but will be markedly improved once the country joins the EU. Admission to the trade bloc, though, is still a long way off. Although inflation remains very high, it is forecast to drop substantially this year to 24%.

United Arab Emirates: B+

The steep rise in oil prices continues to bolster the economy; however, a slowdown in domestic demand and labor reforms are tempering the overall economic gains. Banks are trimming back their willingness to lend because of a rise in bad debts, and this is putting additional downward pressure on domestic demand. GDP growth is estimated at 5.1% this year, while inflation should stay relatively the same at 4.1%.

United Kingdom: A-

Protests by farmers and truckers over fuel prices last September had a severe effect on business and public services. The question of what will happen with the tax on fuel has yet to be resolved, and whichever way the government chooses, there will undoubtedly be a consequence. If the government raises the tax, it could set off a new round of protests; but if the tax is not raised, it leaves the government with considerably less in the surplus and likewise less for public spending.

Venezuela: C

Revenues from higher oil prices have helped the economy, yet the political environment has kept sizeable foreign investment at bay. Trade talks with Brazil, however, could prove to be a mighty boon to the economy if they open market opportunities for Venezuela in Brazil's huge economy. Inflation should jump to 19% this year, while GDP growth should grow modestly to 3.5%.