Country Risk Analysis

Topics: International trade, Balance of payments, Current account Pages: 3 (1044 words) Published: April 30, 2010
Running head: COUNTRY RISK ANALYSIS

Balance of Payment

The current account balance of China amounts to 297.1 bn US$ in the financial year 2009, whereas for the Guatemala it amounts to -0.62 bn US$ in the same financial year (China's current-account balance 1982-2009). This implies that the current account balance of the home country stood at surplus as compared to that of the host country. As far as capital account is concerned, it amounts to 109.1 bn US$ in 2009 for China whereas for Guatemala was far less compared to that of China which implies that the home country's capital account balance is also at surplus in comparison to that of host country. Apart from the current account and the capital account balances of both the countries, the official gold holding of China as on December 2009 amounts to 1054 tonnes which was equivalent to 1.5% of the of the national forex reserve, whereas for that of Guatemala, it was 6.9 tonnes in the same financial year equivalent to that of 4.5% of the national forex reserve (Guatemala Economic Statistics and Indicators, 2010). Government variables:

The government of China has been actively involved in formulating an effective fiscal policy so that the key projects can be easily financed by issuing government debt. Apart from the fiscal policy, the monetary policy is formulated in coordination to that of the fiscal policy so as to promote economic growth by containing deflation to the extent possible.

As far as the monetary and the fiscal policy of Guatemala is concerned, a series of structural reform is done with a primary motive to increase the economic efficiency by strengthening balance of payments and controlling inflation. The monetary rate has been stable because of the strict fiscal administration and the abundance of natural resources.

The legal court system of china is based on civil law which was divided into four level court system of which at the highest level is the supreme people's court, then local...

References: Company Law of the People 's Republic of China, 2005. Retrieved April 24, 2010 from http://www.chinadaily.com.cn/bizchina/2006-04/17/content_569258.htm
China: Trading in Free Trade Zones, 2006. Retrieved April 24, 2010 from http://www.hg.org/articles/article_1191.html
China 's current-account balance 1982-2009. Retrieved April 24, 2010 from http://www.chinability.com/CurrentAccount.htm
Guatemala Economic Statistics and Indicators, 2010. Retrieved April 24, 2010 from http://www.economywatch.com/economic-statistics/country/Guatemala/
Legal system of guatemala. Retrieved April 24, 2010 from www.oas.org/juridico/Mla/en/gtm/en_gtm-int-description.pdf
Labor Rights in Guatemala. Retrieved April 24, 2010 from www.ghrc-usa.org/Publications/factsheet_LaborRights.pdf
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