Investment risk map, how does Albania rank? The country is positioned among the most stable economies in the region
Visual Capitalist has published a study on the countries that pose the greatest risk to investment. According to the data, the gap between economies is significant. While a small number of stable economies have risk premiums of around 4-5%, countries facing conflict or economic collapse can exceed 30%, showing how significantly risk perceptions vary in global markets.
As for Albania, it turns out that our country is ranked among the countries with a relatively low level of investment risk. Specifically, Albania has an investment risk of 8.9%, ranking second in the region. Serbia is presented as the country with the lowest risk with 8.1%, while the countries with the highest investment risk are Montenegro and Bosnia & Herzegovina, with 10.1% and 12.6%, respectively.
Meanwhile, according to the study, Europe is not homogeneous in terms of risk levels. Southern countries, whose economies were hit hard by the 2009 debt crisis, have higher risk premiums. Spain and Portugal are at a risk level of 5.8%, Italy at 6.7%, while Greece reaches 7.1%.
How investors support the riskiest markets
To estimate the investment risk premium, the study analyzed each country's credit rating and the additional interest that investors demand when lending. For countries where government bonds are not available or are not traded on financial markets, the estimate was based on changes in stock returns on two emerging market indices.
The riskiest countries are usually those experiencing wars, sanctions or economic collapse. Belarus, Lebanon, Sudan and Venezuela each have very high risk premiums for stocks, around 30.9%. On the other hand, Cuba, Ukraine, Syria and Yemen are part of a group of countries with risk premiums around 19.8%.
Countries considered safest for investment
Some of the countries considered safest for investment include Canada, Germany, Switzerland, Singapore, Sweden, and the Netherlands, which have risk premiums of around 4.2%. Investors tend to treat these economies similarly due to their economic and financial stability.
The US has a slightly higher premium of 4.5%, which may reflect recent political polarization and higher stock volatility.
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