Location Risk Monitoring

Q4 2018, Supply Wisdom Monitor: Country Risk Index

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Q4 2018 Supply Wisdom Index: Location Risk Monitor covers global outsourcing markets and ranks key locations based on the Composite Risk score, a comprehensive measure of important risk criteria.

Q4 2018 Country in Focus:

China

  • China widened income tax exemption on re-invested profits for foreign firms in order to boost foreign investment amid trade tensions.

  • China’s foreign exchange regulator also abolished 17 regulations on forex management as a part of the government’s reform to improve regulations and services and to promote trade and investment facilitation.

  • China and U.S. agreed to a 90-day truce to keep their trade war from escalating and to find an amicable solution. However, situation again became strained after CFO of China’s Huawei Technologies was arrested in Canada at the request of American law enforcement authorities.

  • China retaliated by detaining a former Canadian diplomat and a businessman. Amid heightened diplomatic tensions, United States and Canada issued fresh travel warning for their citizens traveling in China to exercise increased caution due to ‘arbitrary enforcement of local laws’.

Click on any country for more information. + Moved up – Moved down
Rank Country Overall Risk Score
Q4 2018 Q3 2018
#1
China
0 4.11 4.14
Chinese economy expanded 6.4% during the quarter, the lowest growth rate since the global financial crisis due to ongoing trade dispute with the US and weakening domestic demand. In order to attract more foreign investment, China widened the tax exemption for foreign firms on reinvested profits and also relaxed forex management regulations to promote trade and investment. Key challenges in terms of soaring cybercrime levels and rising pollution levels prevail in the country.
Financial
Financial Risk decreased during the quarter due to decline in rental growth rate. 
Geo-Political
Geo-Political Risk declined marginally driven by reduced risk from floods & hurricanes during the quarter.
Business
Business Risk declined as China climbed up by 32 places to 46th place in ‘Doing Business 2019’ Report published by the World Bank.
#2
India
0 4.15 4.09
Slowdown in consumer spending amid high oil prices and a weaker rupee against USD slowed India’s economic growth to 7.1%. With respect to geo-political front, rise in Zika cases prompted U.S. to issue alert for avoiding nonessential travel to affected areas. On a positive note, India’s Goods and Services Tax Council allowed ‘Input Tax Credit’ to IT and ITeS Companies. India also introduced reforms to create a simple and hassle-free visa regime.
Macro-Economic
Macro-Economic Risk increased due to decline in GDP growth rate.
Financial
Financial Risk decreased owing to notable drop in rental growth rate.
Business
Business Risk decreased due to various government reforms making it easy to start a business and get construction permits.
#3
Poland
0 4.59 4.61
As per Doing Business Report 2019, Poland moved down by 6 ranks to 33rd position driven by the surge in time spent on paying taxes by entrepreneurs. However, Poland still performs well in the field of international trade, access to corporate loans and bankruptcy procedures. Poland’s economy grew 4.8% in 2017 and is expected to grow over 5% in 2018.
Financial
Financial Risk decreased owing to notable drop in rental growth rate.
Geo-Political
Geo-Political Risk declined as no major protest or social unrest was reported during the period.
Quality of Life
Quality of Life Risk increased owing to the unfavorable weather conditions.
#4
Ireland
0 4.63 4.64
Ireland’s central bank estimated that the country’s GDP would expand by 6.7% in 2018 and 4.8% in 2019. However, the Brexit might significantly impact Ireland’s growth over the coming years. World Bank’s Doing Business 2019 report ranked Ireland in 23rd place primarily due to improvement in its credit registry coverage. In October 2018, Ireland re-elected Michael D. Higgins as President for a second term and voted to remove the ban on blasphemy from the Constitution.
Macro-Economic
Macro-Economic Risk increased during the quarter due to drop in GDP growth rate.
Financial
Financial Risk witnessed a uptick due to increase in cost of registering property.
Geo-Political
Geo-Political Risk registered a notable increase due to the increase in social unrest.
#5
Philippines
0 4.79 4.82
Philippines’ inflation rate slowed down to 5.1% in December 2018 due to cheaper food, non-alcoholic beverages, and fuel. The country’s economy also grew at a faster pace in the fourth quarter of 2018 and expanded by 6.1% in the October to December period, compared to the revised 6% in the third quarter. However, Philippines’ ranking in World Bank’s Doing Business 2019 report slipped to 124th place on account of coverage, scope and accessibility of credit information and trading across borders.
Macro-Economic
Macro-Economic Risk decreased during the quarter due to increase in GDP growth rate and drop in inflation rate.
Financial
Financial Risk declined due to drop in rental growth rate during the period.
Geo-Political
Geo-Political Risk reported a minor drop due to improved political stability in the country.
#6
Brazil
+1 4.92 4.97
Brazil’s economy showed marginal improvement in Q3 2018 when compared to the previous quarter. The economy is expected to gain momentum in 2019, under President Jair Bolsonaro’s new administration. On the other hand, the risk associated with epidemics remained high, with nearly 10,000 confirmed cases of Measles been reported in the country with majority of cases in the states of Amazonas and Roraima. Some of the other key challenges include social unrest in the form of violent protests and high crime rates.
Financial
Financial Risk spiraled up during the quarter due to surge in rental growth rate. 
Geo-Political
Geo-Political Risk declined mainly due to improvement in political stability.
Business
Business Risk declined significantly as Brazil improved its ranking in ‘Doing Business 2019’ Report published by the World Bank.
#7
Mexico
-1 5.01 4.89
During the quarter, the credit rating agency ‘Fitch’ downgraded Mexico’s debt outlook from ‘Stable’ to ‘Negative’ citing the uncertain policies of newly elected President Andres Manuel Lopez Obrador. In October 2018, Mexico’s central bank raised threat level in its payment system due to possibility of cyber-attacks. Geo-Political stability of the region remains one of the key concerns with social unrest in the form of protests and natural disasters such as earthquakes and floods.
Macro-Economic
Macro-Economic Risk witnessed an increase driven by rising fiscal deficit and interest rate.
Financial
Financial Risk increased due to rise in rental growth of office properties during the quarter.
Geo-Political
Geo-Political Risk registered a notable increase due to the formation of new government in the country.
#8
Colombia
0 5.05 5.03
Colombia is witnessing rising economic growth as its current account deficit narrowed to 3.6% of GDP between January and September 2018, from 3.9% in the same period of 2017. On the geo-political front, measles outbreak was reported in Colombia with 129 confirmed cases between March and October 2018. Furthermore, the country faces key challenges such as cyber-attacks and large-scale protests.
Geo-Political
Geo-Political Risk increased during the quarter due to surge in the number of protests/strikes across the country.
Legal / Security And Compliance
Legal / Security And Compliance Risk moved upward due to increase in tax policy risk.
Business
Business Risk registered an increase as Colombia’s ranking slipped to 65th place in ‘Doing Business 2019’ Report published by the World Bank.
#9
Vietnam
0 5.08 5.12
Vietnam’s economy recorded a growth rate of 7.08% in 2018, the highest growth since 2011. The growth was chiefly driven by exports, domestic demand, foreign investment, and the manufacturing sector. With prime focus on infrastructural development, Vietnam has attracted 147 public-private partnership (PPP) projects worth US$52 B.  On the geo-political front, the risk from natural disasters continues to threaten the business operations that do not have appropriate business continuity plans in the country. Also, the spike in dengue cases remains a cause of concern.
Macro-Economic
Macro-Economic Risk reported decline during the quarter driven by trade surplus and increase in GDP growth rate.
Geo Political
Geo-Political Risk decreased as no major protests were witnessed during the quarter.
Business
Business Risk declined as Vietnam reduced the time and procedure required to start business in the country.
#10
Hungary
0 5.09 5.19
Hungary’s economy expanded 4.9% year-on-year during July – September quarter, the same pace as in the previous period (April – June) and slightly above a preliminary reading of 4.8%. Hungary faces severe social unrest after the Parliament passed a controversial law in December 2018 that raises the amount of overtime employers can demand their employees work.
Macro-Economic
Macro-Economic Risk decreased during the quarter due to increase in foreign direct investment during the period.
Financial
Financial Risk declined due to drop in rental growth rate during the period.
Scalability
Scalability Risk witnessed an uptick driven by increase in attrition rate of Business Process Outsourcing (BPO) sector.