The top economic growth and fiscal performances in 2007 are likely to be from countries outside the ranks of the most developed Western nations, according to a new set of sovereign risk forecasts from Standard & Poor's Ratings Services.



The U.S. is set to drop out of the 10 rated countries with the highest GDP per capita in 2007. Russia will continue its star performance of recent years, becoming one of the 10 largest economies (as measured by GDP), moving up from 18 as recently as 2000.

Standard & Poor's forecasts are included in a series of reports published today on economic and fiscal trends among the 113 sovereigns that it rates in Europe, the Middle East, Africa, the Americas, and the Asia-Pacific region. The implications of these indicators for sovereign credit risk this year are summarized in a global report titled "Sovereign Risk Indicators: 2007 Outliers."

"The fastest-growing economies will be those of small countries with new energy projects coming on stream, many of the new members of the EU, and China once again," said David T. Beers, Standard & Poor's head of global sovereign ratings. "Oil and other commodity-producing nations that have strong fiscal rules in place will post the highest fiscal surpluses, while among the governments that posted weak budgetary performances in 2006, we expect budget deficits to narrow in Hungary, Vietnam, Egypt, India, and Japan this year."

The expected weakness of the U.S. dollar means that those countries with currencies not tied to the dollar may see their wealth, as measured by GDP per capita, rise in dollar terms. This trend, combined with slower economic growth in the U.S., is likely to push the world's largest economy out of the top 10 in terms of nominal per capita GDP for the first time with Sweden taking its place.

In terms of government debt or asset levels in either the fiscal or external accounts, the top of the rankings will remain relatively stable in 2007, dominated by major commodity exporters (especially the Gulf states and Norway), small and wealthy financial centers (Luxembourg, Liechtenstein, and the Isle of Man), and fiscally parsimonious Singapore.

"Most rated sovereigns reduced their reliance on external funding so far this decade," Mr. Beers added. "They did so either by improving their saving-to-investment balance or by debt relief."

Several of Standard & Poor's rated governments in sub-Saharan Africa improved their debt profile by participating in the Heavily Indebted Poor Countries initiative, thus obtaining debt forgiveness from official creditors. Conversely, despite their efforts to obtain debt relief from private creditors in the past decade, we nevertheless expect Argentina, Belize, Pakistan, and Uruguay to remain highly indebted to foreigners in 2007, measured either by government debt as a percentage of GDP, or by total debt as a percentage of their current account receipts.