Hamish McRae: Effects of attacks in the US will be slow to trickle down

Russia should escape the global recession thanks in part to the events of 11 September

As the military action carries on it is becoming clear that there will be huge winners and losers as a result of 11 September. But the losers, inevitably, are more evident than the winners. In any case, in assessing winners and losers the response of the financial world has been skewed: some things have been taken on board very swiftly, whereas other aspects have yet to be fully grasped.

Thus the impact on companies has already been reflected in the markets. Of course in a world of enormous uncertainties some things – such as the pressure on airlines – is absolutely certain. So in a sense it is easier to reflect that. By contrast the macroeconomic impact on the various world economies has taken longer to assess. There is a particular confusion as no one is even sure of the base: forecasts were being revised downwards before 11 September but probably not fast enough. But at least the commercial forecasters have been at work; the official ones will eventually catch up.

One trouble, though, with most of the work is that it has focused on the developed world. That is inevitable, for this is the primary concern of the commercial forecasters' clients. However, some of the most serious losers and indeed winners are in the rest of the world. The scale of the impact there is only just beginning to be appreciated by the West.

One way of getting a fix on this is to work from national figures and look at the vulnerability of different countries to the ups and downs of the US market. It is not a perfect guide. As the graph shows Japan, Singapore, Mexico and Germany are the most exposed, more so than Taiwan. Yet Taiwan has been particularly hard hit, as its exports to the US are principally electronic components, a business in the gravest trouble before 11 September. Singapore has an even worse problem for the same reason. By contrast Mexico has been less severely damaged because its exports are middle-technology products. (These figures show related party trade, meaning trade between US companies and their subsidiaries as well as trade by US subsidiaries of foreign companies with their parents.)

Another way of getting a fix is to go round the various countries and see how local conditions have changed in the past four weeks.

Russia, it seems clear, will be a huge winner. Not only have high oil prices helped it in income terms but the large current account surplus (12 per cent of GDP) is also helping restore its creditworthiness in international markets. Growth last year was 8.3 per cent (yes, faster than just about any other country in the world) but this was expected to fall back sharply this year. Now HSBC is forecasting 4.5 per cent growth this year, and 3.5 per cent in both 2002 and 2003. The simple point here is that Russia should escape the global recession thanks in part to the events of 11 September.

At the other end of the scale, a clear loser must be Indonesia, the most populous Muslim country in the world. Its tourist industry had already been seriously damaged by internal political unrest but it was just beginning to recover. Now advice to US and British residents that they should stay indoors is not a great bull point recommending people to visit the country. So there is an enormous short-term blow, hitting a key foreign exchange-earner that had already been weakened. Worse, future foreign direct investment will be extremely hard to obtain, so the ability of the country to show decent growth through the next few years will have been gravely damaged.

Expect similar, though less serious, damage in Malaysia and other East Asian countries where there have been anti-Western demonstrations. There will be some offset in Malaysia from higher energy prices but these are unlikely to offset the loss of foreign direct investment, already jeopardised by longer-term fears of political instability. The great imponderable of the region, of course, is China. It will almost certainly be a net loser, though not on the scale of little, heavily US-dependent countries like Singapore.

By contrast, the impact on the Middle East may turn out to be neutral, with higher-than-expected oil prices compensating for loss of travel and tourist income. But that is overall. Some countries will be net gainers – Saudi Arabia, as the world's largest oil exporter – while others, like the transport and service hub Bahrain, will be net losers.

You can carry out a similar crude exercise in other regions. Take central and eastern Europe. The Ukraine and Belarus will gain – two countries that have had a miserable time in recent years, partly because of their energy reserves but also the integration of their economies with that of Russia. By contrast the Czech Republic will lose, caught up in the backwash of slower growth on the Continent, particularly in Germany.

Look at Latin America and I suppose the similar checklist would put Argentina at the top of the negative list and Venezuela at the head of the positive one.

At the moment this sort of exercise has to be back-of-an-envelope stuff: there are very few useful figures to work with and those figures that do exist are probably wrong. The big point that is only gradually being taken on board is that our assumptions about the countries we think of as star performers and those that we deem basket cases has to be changed.

Some of the star performers of the past two decades are going to have a very tough adjustment ahead of them; some of the basket cases will have a very good run for a decade, maybe more.

This is going to change the way the West thinks about the rest of the world in economic terms as well as political. This is not just an investment issue. It is a prosperity issue, for shifts in the direction of foreign direct investment are enormously important in determining the future prosperity of both countries and regions.

Big changes in the relative prosperity of different regions take a generation to show their effect. It is far too early to suggest that we will see a sustained rise of Russia and a relative decline of the tigers of East Asia – but that is the sort of shift that we need to be thinking about. Might it happen? What might the consequences be if it does?