All Coface Publications
Starting with falling oil prices and financial markets in the winter, the Brexit referendum in the summer and the election of Donald Trump in the autumn, 2016 was punctuated by a series of upsets. Can we hope for more calm – or even improvements in 2017?
Although the end of 2016 was marked by the upsets in the US, with the unexpected outcome of the US presidential elections and the Fed’s long-awaited raising of key lending rates, neither of these events triggered a collapse in the financial markets. In emerging economies, there has even been a detectable uplift in recent months – but can this last?
The fog of uncertainty dominating the economic sphere is unlikely to lift in 2017. The forecasts on the repercussions of the events of 2016 remain unclear.
Among these uncertainties are (i) the as yet unknown and unpredictable policies of Donald Trump, both internally and in terms of spillovers (such as the impact on Mexico, where activity is already slowing, with a lowering of Coface’s assessment to B); (ii) the lack of visibility on the future of the United Kingdom, where the terms of its exit from the European Union are yet to be defined; and (iii) the dominance of political risks linked to upcoming elections1 (namely in the Netherlands, France and Germany). In addition to these undetermined risks, are “conventional” hazards, such as concerns over the slowing and rebalancing of economic activity in China and questions on how quickly the prices of raw material will rise. One new factor, however, will be the expected return of inflation, if only as a mechanical reaction from the reaching of the lowest point for raw materials prices in 2016, and even though domestic demand remains relatively restrained.
Poland has seen a slowing of its economy this year, compared to 2015. Nevertheless, growth is still continuing at a fair rate and, in fact, remains at a level which many other economies can only dream of.Read More
French growth has taken a time-out in Q2. The political uncertainties in the United Kingdom, the strikes in May and the floods affecting Ile-deFrance are all likely suspects responsible for this surprise halt. However, the figures are expected to recover in Q3.Read More
The importance of the Agrobusiness sector varies between the different North African economies. While on a regional level, the sector leads exports, on a country basis it differs. In Morroco, agribusiness benefits from government subsidies, as it contributes nearly 16% of GDP and provides employment for 40% of the population. Overall, across the main north African countries, the lowest level of risk is in Morocco...Read More
In the light of the on-going structural reforms, the "tale of two Chinas" is resulting in sector wise winners and losers, linked to their growth potential in the medium and longer term, government policies and structural demand.Read More
Sluggish global growth, characterised in particular by China's loss of momentum, shock to commodity prices… Sub-Saharan Africa has not been spared in the global tempest and seeks to maintain growth against wind and tide. The commodity producers are the most affected.Read More
Bankruptcies drastically decreased in almost all countries in the region during the course of last year - especially in the four Northern Europe Region (NER) countries we focus on in this panorama, namely Germany, the Netherlands, Sweden and Denmark.Read More
Since 2003, Coface has been conducting annual surveys on business payment experience in China. In 2015, the average credit terms offered by China-based firms decreased again, reflecting a more prudent approach to granting credit facilities to customers. The overall payment experience in China deteriorated and remained very challenging in 2015. This can be seen from the over 80% of the survey respondents reporting overdue experiences, 58.1% with an increase in overdue amounts over the past year and 17.9% with ultra-long overdue amounts (over 180 days) exceeding 5% of their annual turnover. This is in line with the rise of non-performing bank loans, an increasing number of corporate defaults and the deterioration of business and investor confidence. Furthermore, private debt is still growing faster than GDP, with outstanding debts held by the private non-financial sector at 201% in June 2015.Read More
Risks for German exports have risen significantly
The greater export risks faced by German companies are hampering growth performance. As Germany has strong trading ties with the Emerging Market and Developing Economies group (EMs), it is highly exposed to the structural and cyclical weaknesses within these economies. “These external impacts are currently negative, as growth in exports to EMs has been cooling down and is now much weaker than demand from Advanced Economies”, explained Dr. Mario Jung, Regional Economist for Northern Europe Region at Coface.
During the China-Celac Forum1, held at the beginning of last year, China announced its intention to increase its investment stock in Latin America to 250 billion USD within the next ten years and to attain an annual trade flow of 500 billion USD during the same period. China also outlined the building of a "1+3+6" cooperation framework with Latin America. "1" would refer to one plan, "3" to the three engines of trade, investment and financial cooperation and "6" to six fields of industry connections to be strengthened as priorities between China and Latin America (notably energy and resources, construction of infrastructures, agriculture, manufacturing, scientific and technological innovations and information technologies).
1 CELAC: Community of Latin American and Caribbean States
After US households in 2007-2008 and Eurozone states in 2011-2012, emerging countries are now getting their turn at the epicentre of the storm, in part because of excessive debt. How did that happen? Growth cut in half in the emerging world between 2010 and 2015, highly expansionary monetary policies after the Lehman Brothers crisis, and the drop in commodity prices since mid-2014 are all part of the answer.Read More
Following a long period of stagnation, construction in Europe is showing signs of recovery. In France it is the only sector, out of the fourteen studied by Coface, to be rated as very high risk. However confidence is slowly returning. The pace of new-build and pre-owned sales increased respectively by 1.4% year-on-year at the end of September 2015 and by 9.3% in the 2nd quarter of 2015. Nevertheless, despite this slight upturn, the volume of activity in the sector remains below its pre-crisis levels. Household demand remains weak, mainly due to high housing costs and the lack of dynamism in the labour market.Read More
• Improved political stability, economic reforms and foreign investments are supporting Egypt’s economic recovery
• Coface forecasts growth of 4.4% for 2015/2016
• Egypt is still dependent on donations and FDI from GCC countries
• Current account balance fell into deficit in 2015, fiscal deficit remains high
• A slight recovery in the tourism and automotive sectors, although security issues and the fragile economic recovery represent challenges
Brazil, downgraded to B (significant risk of businesses defaulting) by Coface in September, has been facing a scenario of economic juggling. The Central Bank’s increase in interest rates, to control inflation, has compromised GDP. Lower activity is reducing tax revenues and threatening fiscal adjustment. In addition, the government needs Congress’s backing in order to reach its primary surplus targets – but this support is lacking. Political uncertainties are weighing heavily on the country’s economic performance.Read More
The current global economic situation could be summarised as a gradual recovery for advanced economies and turbulent times for emerging countries. Exceptions to this are the emerging economies of Central and Eastern Europe which, in most cases, are on an improving track. Poland, in particular, is outperforming. On a microeconomic level, company insolvencies in Poland are mirroring its accelerating economic growth. Insolvencies dropped by 5.1% in 2014. This trend is continuing and bankruptcies decreased by 3.3% during the first half of 2015, with economic growth recorded at 3.4% in the same period.Read More
• From a rapid take-off of photovoltaics in 2006 to the bursting of its speculative bubble in 2011 with the end of public subsidies
• Strong domination by Chinese companies
• Overcapacity in Europe
• Nevertheless a promising market in the medium term
Energy is more risky than ever, while Information and Communication Technologies is the only sector to receive a positive revision and the automotive industry is adjusting
Although world growth is slowing down (2.6% GDP forecast for 2015 vs 2.7% for 2014), sector dynamics still vary widely throughout the world. Coface has revised its risk assessment for three sectors this quarter: automotive in emerging Asia, energy in the three zones surveyed, and ICT in Western Europe. Despite the difficulties of the oil industry, North America remains the least risky region, thanks to its still buoyant activity.
The Adriatic/Balkan region is very diversified. It consists of many small economies which are supporters of the European Union community idea but have so far received various results - from the Eurozone country Slovenia through the two year-old EU member Croatia to other countries with their separately defined process of the EU integration.Read More
The year 2014 was finally one without a major disaster. After years of recession and ongoing difficulties, the development was positive. There is finally an improvement - not as strong as economists hoped for, but stable. Global growth in 2014 was a modest 3.4%, reflecting a pickup in growth in advanced economies relative to the previous year and a slowdown in emerging market and developing economies. The Eurozone - the most important trading partner for most countries in CEE - increased by 0.8%.
The positive economic development was reflected in declining unemployment rates in the region. This was mirrored by the Top 500 players as well as they increased their staff by 1.7%. Overall 4.2% of the total labour force in the region is employed by the companies of the CEE Top 500.
Since a deep recession recorded in 2009 Baltic economies have genera ted fair growth rates in the last years. They resulted from a robust increase of exports supported by the high economic openness of the Baltics as well as rising household consumption. The exports’ structure differs from other countries of Eastern Europe as the Baltic countries are more exposed to trading with CIS economies. Whereas the contribution of those emerging markets has had a positive effect in previous years, the deterioration of the Russian economy already hampered the economic activity in the Baltic region in 2014 and it will still negatively affect the pace of GDP growth this year.Read More
"Company insolvencies stabilized with a just minor drop by 0.5% as the regional average. Our scenario assumes that companies should experience further gradual decline of insolvencies this year facing good prospects for internal demand and more visible recovery of Eurozone as the CEE’s main trading partner."Read More
Since the signature of the Pacto por Mexico in December 2012, an agreement struck by the three main political parties, the country has witnessed a variety of reforms. President Peña Nieto was efficient in securing cross-party support and big improvements, were made in 2013. The government obtained approval for a landmark energy reform, bringing to an end the 75-year old monopoly of state-owned Pemex and, by opening the oil and gas industries to private investment, freed up the labor market. It has also introduced competition in the telecoms sector. However sluggish growth was reported in 2013 and during the early part of 2014.Read More
The Czech Republic is back on fast track. After falling into recession in 2012 and 2013 due to sharp fiscal consolidation and sovereign debt crisis in the Eurozone, the economy regained momentum reaching solid growth rate of 2.0% in 2014 and should gain speed with 2.5% growth in 2015.Read More
Latin America is a major producer of commodities and recent drop in oil prices is impacting countries of the region in different ways. Some of them may benefit from lower international quotation, others are negatively impacted already in the short term and finally a third group could be affected in the medium term only.Read More
Coface conducts an annual survey of payment experience in China. With 80% of the survey respond-ents shared overdue experience and 56.7% of them saw an increase in overdue amount over the past year, the overall payment experience in China remained very challenging in 2014. This is in-line with the non-performing loan (NPL) figures released by the China Banking Regulatory Commission, which showed that NPL ratio has reached a multi-year high of 1.25% as of the end of 2014. The risk of rising non-payment cannot be neglected.
China’s 7.4%YoY GDP growth in 2014 was the lowest growth rate in the last 24 years, and momentum is on a downtrend (Coface forecasts GDP to grow 7% in 2015). At the same time, the real economy in China is facing rising challenges in 3 major areas: 1) high leverage; 2) high cost of financ-ing, 3) low profitability driven by overcapacities in certain sectors. While monetary easing measures are introduced to smooth out the growth deceleration process, if the additional low-cost funding is not delivered to the parties that need and deserve it, the main purposes of such monetary easing measures are likely going to be defeated, and further concerns on credit pressure would be in sight.
The construction sector in Poland has undergone turbulent times. After the booming period related to increased demand for housing construction as well as massive public investments thanks to organizing the Euro 2012 football championship, the sector experienced a significant deteriorationRead More
Company insolvencies in Turkey: Rise in exchange rates and slowdown in domestic demand affected payment performance. Impaired profitability made payments difficult. Focus on some sector risks : Metal, Automotive, Food, Chemical, Construction, Retail, Textile & apparel.Read More
For the third time, Coface is publishing the Adriatic/Balkan Top 50. The companies are ranked based on their turnover in 2013. The economic problems of the region in the last few years have also taken their toll on the top players: Total turnover declined by 1.2% to EUR 39 billion, and profits decreased dramatically by almost 16% to EUR 702 million.Read More
This Panorama is the second issue of annual publications focused on insolvency trends in Central and Eastern European countries (CEE). It contains the results of a study on insolvencies among the CEE economies, a region experiencing a sharp rise in the rate of insolvencies in many countries during 2013.Read More
Textiles - Upmarket positioning and innovation: Key to the success for the French and European textile industry?
You will find in it our usual barometer, which assesses the risks to which companies in fourteen key industrial sectors in emerging Asia, North America and Western Europe are exposed.
We have also included an analytical focus on European textiles. This traditional industry was affected very early by globalisation, and, in particular, competition from developing countries.
Our third Panorama sector assesses the risks to which companies in fourteen key industrial sectors in emerging Asia, North America and Western Europe are exposed. On top of these evaluations, we provide for each of these major regions a comprehensive overview of developments in distribution, electronics, metals, automotives, pharmaceuticals and services.Read More
In this Panorama, you will find the Coface barometer, which analyzes the evolution of French insolvent companies between November 2012 and October 2013.
We then publish a study on insolvencies in the French construction sector, overrepresented in insolvencies compared to it weight in the economy.
This Panorama includes our global sector barometer, which analyses the situation in fourteen key economic sectors in three of the world‘s major regions (European Union, North America and Emerging Asia) through a single credit risk indicator. In Europe, sector risks continue to deteriorate, especially in chemicals due to the remaining difficulties in the European industry, and also in the pharmaceutical branch due to the fiscal tightening measures taken by the governments.Read More
This new Panorama contains the results of our Company Insolvency Monitor from April 2012 to April 2013 and the results of a study on insolvencies among Eastern European countries, a region experiencing a sharp rise in insolvencies rate.Read More
Coface releases a series of economic reports and is pleased to announce the publication of its second Panorama sector report. Readers will find in it a global sector barometer which analyses the situation in fourteen key economic sectors. The originality of the analysis is that it is based on aggregating the accounts of 6,000 companies in three of the world’s major regions: the European Union, North America and Emerging Asia.Read More
In this Panorama, Coface highlights the radical transformation of risks in emerging countries. While traditional country risk (sovereign risk, external vulnerability) has appreciably declined, three new risks are appearing and need to be monitored.Read More
The 17th Country Risk Conference held by Coface on 22 January 2013 has confirmed the complexity of a situation where, more than ever, the world seems to be «split in two»: advanced versus emerging countries.Read More