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rP os t TB0087 October 21, 2007 F. John Mathis Paul Keat John O’Connell Country Risk Analysis and Managing Crises: Tower Associates op yo Susan Brédé got up earlier than usual, with her mind churning over a decision she had to make before week’s end, and it was already Wednesday. Susan was a senior partner for a large private equity firm, Tower Associates, which wanted to expand overseas into emerging markets. Tower had about $27 billion in assets under management. Its primary investment base was the United States and Canada, but over the past five years it had expanded into Europe. Now, Tower wanted to diversify its investment portfolio and reduce risk, but also grow its business in rapidly expanding markets with greater opportunities than in the traditional industrialized countries. tC The first step in this process was to identify which emerging markets offered the greatest profit potential over a 5–7-year time horizon. Tower’s intention was to acquire local companies, restructure them, inject new money to rapidly expand their revenue and net income, and then sell them at a significant gain. However, Susan was well aware of the potential pitfalls and economic crises that lurked overseas, especially in emerging markets, and she wanted to minimize and manage the risk to Tower Associates before making an investment recommendation. Her first step was to determine which markets in which countries would make the best investment targets. To do this, Susan had to establish a list of characteristics that was important to Tower Associates from a business perspective, and then match them with characteristics from various potential investment target markets and countries. No Top among the desired characteristics were political and economic stability. Running a close second were well-functioning legal and accounting systems. The selected country or countries also needed to have a favorable entrepreneurship environment, a supportive attitude toward foreign investment, and some form of developed internal financial market. Applying these criteria would greatly narrow the number of countries that could be considered viable investment prospects at the present time. The primary target markets identified were in Asia, Latin America, and the former Soviet republics. Within these areas, the countries with the best investment potential were those referred to as the BRIC and the N-11 countries (Brazil, Russia, India, and China in the first group, and Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, and Vietnam in the second). Do Following several weeks of intense internal discussions and debate, Susan identified four countries (from among the BRIC and N-11 countries) as optimal potential investment targets for Tower Associates. Specific performance information about these countries was assembled and is presented in the Copyright © 2007 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professors F. John Mathis, Paul Keat, and John O’Connell, for the purpose of classroom discussion only, and not to indicate either effective or ineffective management. Michele Schrader, research associate, prepared the data tables used in the case. This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. Historical Review of Country Crises rP os t attached tables, with countries identified only by letter. The names of the countries were withheld in order to prevent bias in the analysis. Going global requires understanding the possibility that a country in which a company is invested may experience some form of financial crisis. Most countries have been through one or more crises, and some have been subject to repeated crises because of mismanagement. Several books and detailed studies provide a good understanding of these crises and their causes.1 There are four major types of crises that have an impact on the economy of a country: currency, financial, foreign debt, and banking crises. op yo 1. Currency crisis occurs when a speculative attack on the exchange value of a currency results in a devaluation or sharp depreciation of the currency. A currency crisis often forces the government to defend the currency by expending large volumes of international reserves and/or by sharply raising interest rates. Since World War II, there have been several major currency crises, including: • 1971—the U. S. suspended gold convertibility because its foreign dollar liabilities exceeded its gold holdings • 1973—the U.S. devalued the dollar and then floated it • 1992-93—after a period of currency turbulence in Europe, the European Economic Union was established, and a common currency, the euro, eliminated the former currencies of each member country 2. Financial crisis is a severe disruption in financial markets that, by impairing a market’s ability to function effectively, may result in significant adverse effects on economic activity. Major examples include: tC • 1980s—the U.S. changed the way it managed monetary policy from targeting interest rates to targeting money supply growth, causing U.S. interest rates to rise sharply • 1997—a financial crisis in Southeast Asia caused strong capital outflows • 2000s—early in the decade, the technology stock market bubble in the U.S. burst, affecting overseas economies • 2007—a real estate crisis in the U.S., centered on the sub-prime mortgage industry, spread to global investors who had purchased the mortgage debts No 3. Foreign debt crisis occurs when a country cannot service its foreign debt, whether sovereign or private. Two benchmark examples include: • 1982-84—most of the rapidly growing emerging market economies could not make their foreign debt service payments, causing major foreign debt defaults and bank loan write-offs, loan restructurings, and foreign debt swaps • 1997—the Asian financial crisis resulted in foreign debt restructurings Do 4. Banking crisis results when actual or potential bank runs or failures cause banks to suspend the internal convertibility of their liabilities, compelling the government to intervene to prevent this by extending large-scale assistance.2 Two landmark examples include: 1 Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises, Basic Books, 1978 IMF, World Economic Outlook, May 1998, Section IV. 2 Michael D. Bordo, “Financial Crises, Banking Crises, Stock Market Crashes, and the Money Supply: Some International Evidence, 1870-1933,” in Forrest Capie and Geoffrey Wood, eds., Financial Crises and the World Banking System, St. Martin’s Press, 1985. 2 TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. rP os t • 1980s—U.S. interest rates rose sharply, causing the failure of about one-third of the banks in the United States • 1990s—the Japanese government was forced to rescue Japanese banks by purchasing their substantial nonperforming loans The International Monetary Fund (IMF) published a landmark study of global crises in its World Economic Outlook in 1979. This exhaustive study documented 158 currency crises—including 55 currency crashes and 54 banking crises between 1975 and 1979. It recognized that banking crises are significantly worse than currency crises because they last longer, and it typically takes at least three years or longer before real GDP returns to its normal rate of growth. Understanding the Birth and Life Cycle of Crises op yo A change in political or economic conditions inside or outside a country can precipitate a crisis. Countries with a history of political instability are more likely to suffer an economic crisis that will overwhelm any potential for high investment returns. Thus, the countries that investors focus on tend to be those with a record of political stability. Any investment analysis, therefore, should examine how well a government manages economic conditions and how effective its policy actions are. Domestic economic conditions may change suddenly because of internal events and/or because of unexpected external economic shocks. Since it is often very difficult to predict these events, most analysts focus on how well a government responds to and neutralizes these shocks. This type of analysis requires examining the immediate or short-term effectiveness and consequence of government policy changes, as well as the long-term implications of these actions for the economy. tC Some countries are more prone to market or economic shocks than others and, therefore, it is important to assess a country’s vulnerabilities. For example, an economy dominated by a single industry or with a high dependence on one export product may be more sensitive to sudden changes if commodity prices rise or fall, or if demand increases or decreases. Thus, more diversified economies tend to be less vulnerable to unexpected internally or externally originated events. Additional factors that may increase certain countries’ vulnerability to crises include fluctuations in commodity prices, interest rate changes, environmental issues, and contagion. Since an investor’s objective is a timely return on investment as defined by the terms and conditions of an agreement, it is important to understand a country’s sources and uses of funds or, more specifically, convertible currencies. A country can obtain convertible currencies in several ways: by exporting goods or services by earning fees from overseas workers or investments from dividends or income invested in convertible currency assets from foreign direct investment from foreign portfolio investments if there is a financial market by using its accumulation of international reserves of convertible currencies. No • • • • • • Do If these sources of funds are insufficient, then the country must pursue foreign borrowing. Loans from investors or the sales of bonds to foreigners carry a foreign debt servicing requirement. However, if the country has a viable equity market that attracts foreign capital, the country may not have to borrow, thereby avoiding a debt service obligation. The indicators of a potential crisis may be divided into short-term (within one year) and longerterm (within one to five years).3 The most commonly used short-term early warning indicators of a crisis in a country include variations or changes in stock market prices, real estate prices, real interest rates, and real exchange rates. In most instances, when these indicators follow a certain pattern, they 3 IMF, World Economic Outlook, May 1998, Section IV. TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. 3 rP os t foretell a foreign exchange or financial crisis within the next six to nine months. The pattern is a very sharp rise (50% or more within a one-year period), followed by a sudden (20% or larger) decline. The crisis occurs within six to nine months of the turning point. This represents what is commonly referred to as a “bubble in prices,” which then bursts. Factors which can cause a run up in asset prices tend to be the drivers of liquidity in an economy. These variables include money supply growth and domestic credit expansion in both real and nominal terms. These factors may not only signal foreign exchange and/or financial crises, but may also be leading indicators of banking crises. Foreign capital inflows from foreign direct investment, portfolio inflows, or a sudden jump in inflows as recorded by “errors and omissions” in the balance of payments may also cause excessive liquidity problems. Most emerging markets have a “limited” capital absorptive capacity as constrained by the stage of development of the country’s infrastructure. Because infrastructure is not created quickly, but normally takes several years to build, unsustainable economic imbalances aggravated by or resulting from unsustainable macroeconomic policies can precipitate crises. op yo Taking a longer-term perspective of the causes of crises, several indicators of foreign debt service capacity have traditionally been useful. These measures include: • the debt service ratio which tracks the percent of export earnings used to pay principal and interest payments on the foreign debt • short-term debt as a percent of total debt • variable rate debt as a percent of total debt • total foreign debt as a percent of GDP • the merchandise trade balance or current account balance as a percent of GDP tC Trigger points have been determined based on past experience. For example, if the foreign debt service ratio exceeds 30%, it is a warning signal of a foreign debt crisis; if it is close to or above 50%, a crisis becomes almost certain unless economic policy is changed. The same percentages apply for shortterm debt or variable rate debt as a percent of total foreign debt. Similarly, when the trade or current account deficits approach 6% of GDP, this is a crisis trigger point indicating a high probability of a crisis. Another useful indicator is the amount of convertible currency a country is holding as part of its international reserves as measured in terms of months of imports covered. International reserves equal to three months of imports are considered safe. Below this level, the country has no convertible currency savings account or cushion of savings to protect itself from a crisis. No The Challenge Susan’s challenge was to analyze the country data in the tables and determine which country offered the best opportunity for strong real growth. At the same time, she had to identify which country was most likely to experience some form of country risk crisis. Her forecast period was the next three to five years. The recommendations had to be clearly justified with supporting arguments based on the data provided. Do The Countries Country A is a large advanced, developing country that had its share of economic problems in the 1980s, but since then has been performing relatively well. Economic growth is strongly supported by the government in terms of spending as a percent of GDP and as measured by the deficit in the fiscal budget. Domestic private investment as a percent of GDP, on the other hand, is not strong. Although money supply growth has been modest, inflation remains high. The currency floats more or less freely. 4 TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. rP os t Country B is a large industrial economy that has experienced volatile performance during the past decade. It has vast resources including energy resources to support continued transition to a more diversified competitive economy. Private business investment has been growing as a percent of GDP while the role played by the government has been declining. During the upcoming year some significant changes are expected in the political leadership of the country which could impact growth prospects. The country could have great potential depending on the outcome of this transition. Country C is a large developing country, well-endowed with natural resources but lacking sufficiently developed infrastructure to allow it to utilize them effectively in support of GDP growth. The economy is not yet a market economy, but is moving in that direction as the government has gradually liberalized its control. It continues to influence consumer prices, interest rates, and the exchange rate in order to prevent deterioration in living standards for most of the population. The economy continues to gain momentum as it expands its economic infrastructure. Do No tC op yo Country D is a large developing economy, well-endowed with natural resources but lacking the economic infrastructure needed to capitalize on its wealth efficiently. The economy is moving in the direction of a market economy and is very entrepreneurial with wide disparity in income distribution. Consumption represents only one-third of GDP. The government continues to cautiously manage consumer prices, interest rates, and the exchange rate to keep the economy on its rapid growth path. TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. 5 Country A rP os t Table 1 2003 2004 2005 2006 58.04% 19.76% 20.13% 13.10% 10.79% 460,838 1,346,028 745,000 56.74% 19.76% 19.90% 14.45% 10.06% 505,732 1,556,182 749,200 55.20% 21.32% 18.81% 15.97% 16.46% 603,948 1,766,621 786,200 57.00% 20.59% 18.60% 14.80% 9.71% 799,413 1,946,092 805,200 60.37% 16.80% 19.93% 12.88% 8.98% 1,067,706 1,215,762 831,600 2007 est. 61.76% 17.21% 19.16% 11.52% 8.18% 1,177,706 1,269,810 860,000 2.85% -1.08% -3.95% 0.52% -1.66% 0.09% 3.06% -1.11% -2.72% -0.85% -2.41% 8.18% 4.90% -0.98% -3.59% 0.57% 0.83% 0.10% 1.96% 1.05% -3.01% -0.03% 0.89% 9.71% 5.57% -0.77% -3.40% 0.54% 1.94% 0.06% 1.44% -0.79% -1.09% -0.55% 1.45% 8.73% 5.60% -1.02% -1.02% 0.44% 1.78% 0.08% 1.59% 0.61% -0.47% 1.73% 3.59% 6.70% 3.66% -0.73% -0.89% 0.38% 1.33% 0.08% 0.54% -0.13% 0.53% 0.97% 2.38% 10.70% 2.95% -0.75% -1.97% 0.34% 1.16% 0.07% 2.89% 3.16% 1.39% 0.93% 2.16% 12.61% 9.1 11.59 6.37 8.28 10.71 12.56 3.533 2.888 2.654 2.340 2.137 2.221 9.21% 16.75% 21.66% 13.98% 17.04% 11.90% 19.57% 15.82% 18.86% 22.06% 2.23% 4.02% Interest and Inflation Rates Lending Rate (annual) Money Market Rate (annual) Consumer Prices (year 2000 = 100) 62.88% 19.11% 115.9 67.08% 23.37% 132.9 54.93% 16.24% 141.7 55.38% 19.12% 151.4 50.81% 15.28% 157.8 47.20% 12.93% 161.9 Government Finances (% of GDP) Revenues Expenditures Balance 27.44% 25.11% 2.32% 23.83% 23.63% 0.21% 24.70% 23.62% 1.08% 25.51% 23.05% 2.46% 42.85% 36.49% 6.36% 45.48% 52.82% -7.34% Balance of Payments (% of GDP) Trade Balance Net Services Net Factor Payments Net Transfers Current Account Capital Account Net Foreign Direct Investment Net Portfolio Investment Other Capital Inflows Financial Balance Overall Balance Reserves, minus gold (% of GDP) Months of Imports Covered by Int’l Reserves No tC Exchange Rate and Money Supply Exchange Rate (LC/US$, end period) Real Effective Exchange Rate Money + Quasi-money (growth) Domestic Credit (growth) op yo 2002 National Accounts (% of GDP) Consumption Investment Government Exports Imports GDP (US$ millions) GDP (LC millions) Real GDP ( LC millions,1990 prices) Do LC = Local Currency 6 TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. Country B 2002 2003 National Accounts (% of GDP) Consumption 51.08% 50.55% Investment 20.03% 20.80% Government 17.65% 17.60% Exports 31.06% 31.50% Imports 19.41% 19.39% GDP (US$ millions) 345,488 431,488 GDP (LC millions) 10,830,535 13,243,240 Real GDP (LC millions, 2003 prices) 12,348,000 13,243,000 13.41% 13.87% Balance of Payments (% of GDP) Net Services Net Factor Payments Net Transfers Current Account Capital Account Net Foreign Direct Investment Net Portfolio Investment Other Capital Inflows Financial Balance Overall Balance Reserves, minus gold (% of GDP) 2004 2005 2006 2007 48.87% 47.93% 48.73% 51.48% 16.47% 15.96% 17.87% 18.93% 16.47% 15.96% 17.56% 17.16% 31.04% 31.80% 30.92% 33.05% 18.15% 17.99% 18.30% 22.82% 590,287 765,968 985,000 1,183,000 17,008,388 21,664,978 26,781,000 30,757,000 14,197,000 15,105,000 16,117,000 17,190,000 14.54% 15.45% 14.14% 9.92% -2.27% -1.94% -1.52% -1.22% -3.05% -2.16% -2.46% -2.90% -1.77% -0.09% -0.11% -0.11% -0.13% -0.14% 8.43% 8.21% 10.00% 10.95% 9.59% 6.79% 2.18% 0.14% 0.15% 0.09% 0.10% N/A -0.02% -0.41% 0.28% 0.00% 1.09% 0.93% 0.86% -1.04% -0.10% -1.56% 1.77% -1.21% op yo Trade Balance rP os t Table 2 Months of Imports Covered by Int'l Reserves -2.86% -2.52% -1.91% -0.22% -0.45% 2.13% -1.05% 1.88% -1.63% -5.07% 0.39% 0.82% -0.69% 0.35% 1.19% -5.36% 11.00% 9.17% 9.45% 11.38% 10.88% 11.43% 12.75% 16.96% 20.47% 22.96% 30.01% 25.86% 7.88 10.49 13.53 15.31 19.68 13.59 31.780 29.450 27.748 28.782 26.331 25.816 tC Exchange Rate and Money Supply Exchange Rate (LC/USD, end period) Real Effective Exchange Rate (year 2000 = 100) 123.5 127.3 137.3 149.3 163.5 170.2 Money + Quasi-money (growth) 33.77% 38.53% 33.75% 36.27% 40.52% 0.28% Domestic Credit (growth) 26.53% 26.49% 18.68% 2.65% 28.40% -3.75% 15.71% 12.98% 11.40% 10.68% 10.46% 9.90% 8.19% 3.77% 3.33% 2.68% 3.43% 3.80% 140.6 159.9 177.3 199.7 219.1 231.1 Revenues 20.49% 19.47% 20.32% 23.72% 15.82% 22.00% Expenses 18.84% 17.09% 15.47% 16.23% 14.29% 19.00% Balance 1.65% 2.37% 4.86% 7.49% 8.44% 3.00% Interest and Inflation Rates Lending Rate (annual) No Money Market Rate (annual) Consumer Prices (year 2000 = 100) Government Finances (% of GDP) Do LC = Local Currency TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. 7 rP os t Country C 2002 2003 2004 2005 2006 64.30% 22.65% 11.84% 10.09% -10.79% 506,749 24,633,240 22,163,000 63.83% 23.03% 11.31% 10.28% -11.49% 592,493 27,600,250 24,012,300 60.58% 27.20% 11.26% 11.32% -13.87% 688,803 31,214,140 26,022,000 63.78% 23.54% 11.90% 12.76% -16.82% 800,783 35,314,510 28,525,000 56.40% 29.51% 11.34% 13.36% -20.00% 922,000 41,257,000 31,084,000 2007 est. 56.74% 31.66% 11.72% 12.78% -19.91% 1,128,000 46,410,000 33,692,000 Balance of Payments (% of GDP) Trade Balance Net Services Net Factor Payments Net Transfers Current Account Capital Account Net Foreign Direct Investment Net Portfolio Investment Other Capital Inflows Financial Balance Overall Balance Reserves, minus gold (% of GDP) Months of Imports Covered by Int’l Reserves -0.70% -0.31% -0.77% 3.18% 0.21% 0.02% 0.78% 0.20% 1.36% 2.34% 4.29% 13.35% 14.84 -1.50% -0.39% -0.75% 3.80% 1.16% 0.65% 0.55% 1.39% 0.56% 2.49% 5.86% 16.70% 17.44 -2.47% 0.38% -0.59% 2.87% 0.11% 2.52% 0.52% 4.59% 1.39% 3.23% 5.30% 18.38% 15.90 -4.06% 0.98% -0.80% 2.90% -0.98% 3.58% 0.52% 4.46% 0.66% 2.70% 6.92% 16.47% 11.75 -6.64% 3.15% -0.47% 2.83% -1.13% 2.63% 0.92% 4.46% -0.08% 5.42% 6.73% 18.52% 11.11 -7.13% 3.42% -0.47% 2.83% -1.36% 2.63% 0.62% 4.46% 0.11% 5.46% 2.57% 16.64% 10.03 Exchange Rate and Money Supply Exchange Rate (LC/USD, end period) Real Effective Exchange Rate Money + Quasi-money (growth) Domestic Credit (growth) 48.030 104.6 16.76% 15.99% 45.605 103.1 13.03% 9.53% 43.585 102.4 16.73% 18.00% 45.065 106.4 15.60% 15.45% 44.245 106.2 21.65% 22.62% 40.755 115.6 21.20% 21.20% tC Table 3 11.92% 6.25% 108.2 11.46% 6.00% 112.4 10.92% 6.00% 116.6 10.75% 6.00% 121.5 11.19% 6.00% 128.6 12.50% 6.00% 133.9 10.90% 16.80% -5.90% 12.50% 17.10% -4.60% 12.00% 15.90% -4.00% 10.10% 14.20% -4.10% 14.10% 10.70% -3.50% 16.30% 13.00% -3.30% Interest and Inflation Rates Lending Rate (annual) Bank Rate (annual) Consumer Prices (year 2000 = 100) Government Finances (% of GDP) Revenues Expenses Balance op yo National Accounts (% of GDP) Consumption Investment Government Exports Imports GDP (US$ millions) GDP (LC millions) Real GDP (LC millions,1999 prices) Do No LC = Local Currency 8 TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. Country D 2002 2003 45.30% 38.85% 12.90% 24.98% 22.64% 1,303,590 10,789,760 11,298,000 11.43% 42.15% 12.16% 29.80% 28.07% 1,470,699 12,173,030 12,430,000 Balance of Payments (% of GDP) Trade Balance Net Services Net Factor Payments Net Transfers Current Account Capital Account Net Foreign Direct Investment Net Portfolio Investment Other Capital Inflows Financial Balance Overall Balance Reserves, minus gold (% of GDP) Months of Imports Covered by Int’l Reserves 3.39% -0.52% 0.93% 1.00% 2.72% -0.19% 3.59% -0.79% -0.31% 2.48% 5.01% 22.33% 11.84 3.04% -0.58% 3.55% 1.20% 3.12% 0.01% 3.21% 0.78% -0.40% 3.59% 6.72% 27.75% 11.87 Exchange Rate and Money Supply Exchange Rate (LC/USD, end period) Real Effective Exchange Rate (year 2000 = 100) Money + Quasi-money (growth) Domestic Credit (growth) 8.277 101.89 18.28% 27.99% Interest and Inflation Rates Lending Rate (annual) Money Market Rate (annual) Consumer Prices (year 2000 = 100) Government Finances (% of GDP) Revenues Expenses Balance 2004 2005 2006 41.43% 43.79% 11.55% 34.49% 32.62% 1,720,401 14,239,420 13,683,000 25.56% 41.59% 12.20% 38.45% 33.30% 1,981,648 16,238,250 15,106,000 37.40% 42.12% 14.07% 36.06% 29.45% 2,688,100 20,940,700 16,782,000 2007 est. 35.88% 42.15% 13.42% 39.49% 31.14% 3,320,300 25,300,000 18,698,000 3.43% -0.56% 4.64% 1.33% 3.99% -0.10% 3.09% 1.14% 2.20% 6.44% 10.32% 35.72% 13.14 6.77% -0.47% 8.26% 1.28% 8.12% -0.57% 3.42% -0.25% -0.20% 2.97% 10.52% 41.46% 14.94 8.10% -0.33% 0.44% 1.09% 9.30% 0.15% 2.24% -2.51% 0.50% 0.22% 9.67% 39.75% 16.20 9.30% -0.30% 0.72% 1.02% 1.08% 0.15% 1.73% 1.00% 0.50% 3.22% 4.45% 34.92% 13.45 8.277 95.20 19.58% 19.50% 8.277 92.69 14.39% 8.79% 8.070 92.48 17.91% 10.67% 7.809 94.41 15.99% 16.25% 7.616 97.64 3.89% 2.73% 5.31% 1.98% 99.9 5.31% 1.98% 101.1 5.58% 2.25% 105.0 5.58% 2.25% 106.8 6.12% 2.52% 108.9 6.39% 2.79% 111.6 17.77% 20.64% -2.87% 18.01% 20.40% -2.40% 18.54% 20.01% -1.47% 19.46% 20.86% -1.40% 19.11% 13.95% 5.16% 20.65% 14.09% 6.56% tC op yo National Accounts (% of GDP) Consumption Investment Government Exports Imports GDP (US$ millions) GDP (LC millions) Real GDP (LC millions,1990 prices) rP os t Table 4 Do No LC = Local Currency TB0087 This document is authorized for use only by Malgorzata Zieba until November 2011. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860. 9