The World Economic Forum (WEF) reported in its second annual Financial Development
Report that the world’s largest financial centers
still lead its 2009 Index rankings, although the effects of financial instability in the economic recession
have pulled down their scores compared to last year.
The Report ranks 55 of the world’s leading financial
systems and capital markets. The rankings are based on over 120 variables spanning
institutional and business environments, financial stability, and size and depth
of capital markets, amongst other factors. The financial crisis was acutely felt
in most global financial systems and caused most countries’ scores to
drop significantly compared to 2008.
The UK, buoyed by the relative strength of its banking and non-banking financial
activities, claimed the Index’s top spot. However, the US, first in 2008,
slipped to third position behind Australia, largely due to poorer financial stability
scores and a weakened banking sector.
Australia showed particular strength this year, rising to second from a lowly
eleventh, a trend echoed in many Asia-Pacific economies. Singapore and Hong
Kong reached fourth and fifth in the 2009 Index, from tenth and eighth, respectively,
in the previous year.
Germany and France suffered a heavy fall in overall scores that pulled them
out of the top 10. They dropped in the rankings but demonstrated financial stability
scores that were significantly higher than the UK and the US, which
found themselves at 37th and 38th, respectively, in the financial stability
rankings – worse than, for example, Nigeria, Bangladesh and South Africa.
Kevin Steinberg, Chief Operating Officer, World Economic Forum USA, said: “We
hope this report will provide some insight as to how the financial crisis has
affected the world’s major financial systems. It draws attention to the
diversity of factors beyond financial stability that must be addressed to support
the role of financial systems in driving economic growth. The United Kingdom
and US may still show leadership in the rankings, but their significant drops
in score show increasing weakness and imply their leadership may be in jeopardy.”
Some developing countries performed well in the financial stability section
of the Index. Chile came in third, while Malaysia, Mexico and Brazil were all
in the top 15. Norway and Switzerland took the top two spots in this category,
with Hong Kong third and Singapore fifth.
The WEF stated that there is necessarily a lag in obtaining complete cross-country data used to calculate the Index. As successive iterations of the report
are published, it added, the long-term effects of the crisis on financial system
development would become increasingly clear.
LAWANDTAX-NEWS.COM
