All Coface Publications
Despite regional conflicts, the 2007-08 financial crisis, and the 2009-11 eurozone crisis, Western Balkans countries have developed a close economic proximity with the European Union via a number of regional and bilateral agreements. However, due to institutional, economic, and diplomatic obstacles, accession to the EU will be a long process. At the same time, due to the region’s strategic importance and with the reinforcement of membership conditions, accession (or a pre-accession status) is likely to happen – especially as membership would divert the region from other
interested parties (Russia, China).
The exchange rate risk is still relevant on the African continent, as evidenced by the depreciation of the Angolan kwanza by more than 30% since the partial liberalisation of the exchange rate regime in January 2018.Read More
The Chinese economy staged a comeback in 2017. GDP ticked up from 6.7% in 2016 to 6.9% in 2017, favoured by strong demand, as well as loose monetary and fiscal policy settings. As a result, risk managers have become more complacent, both in terms of their economic expectations and their risk management procedures.Read More
While more than 30% of respondents said in 2015 that that the time between the transmission of invoice and collection was between 30 and 60 days, this share decreased to 24% of respondents in 2016 and 11% of respondents in 2017.Read More
Central and Eastern Europe: Less business insolvencies despite temporary headwinds in the construction sectorRead More
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
The Chinese economy has been in the spotlight for several months: devaluation of the yuan, stock market collapse, falling property prices, fears of an excessive economic slowdown, doubts about the reliability of published data and, more generallyspeaking, uncertainties about the rebalancing process the authorities have launched. In this anxiety-provoking environment, other Asian countries seem to be the first potential victims in the event of a hard landing for the Chinese economy.Read More
For the fourth consecutive year, global growth will fail to exceed 3%. At the beginning of the year however, this target did not appear unattainable, as the highly expansionary monetary policies in place, combined with the fall in the oil price and less restrictive fiscal policies, were expected to effectively accelerate growth. But this was not the case. Who is at fault? Chiefly the emerging markets, with Russia and Brazil in deep recession, and with growth slowing down more rapidly than expected in China, while failing to take off in South Africa or in Turkey.Read More
In this first overview of company insolvencies in Europe, Coface examines the following question: Was the return to growth observed in Europe strong enough to bring about a lasting reduction in business failures? For 10 out of the 12 Western European countries studied, the answer is «yes».Read More
In this panorama, we first set out a study examining the economic situation and outlook for Sub-Saharan Africa. After a long period of gloominess, the economic weather became more favorable despite the Lehmann Brothers bankruptcy in 2008 and the eurozone sovereign debt crisis.Read More
In May 2015, the IMF highlighted India as “one of the bright spots in the global economy”, mainly due to more effective policies and the end of political uncertainty. Coface expects the country’s GDP growth to reach 7.5%. But to what extent have Modi’s reforms contributed to the recent pickup in growth? Are the improvements in the economy without risks?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 introduction of milk quotas in 1984, until their effective ending in 2015, milk production has undergone many reforms. Having regulated the market for over 30 years, milk quotas disappeared on 1st April 2015. The world of dairy is in turmoil, with some seeing the end of quotas as an opportunity to produce more, while others are anxious and concerned that potential European overproduction will lead to sharp price falls. And all this is taking place in a context of stiff competition.Read More
The automotive industry in the United States, the"backbone of American industry" according to Barack Obama, was on the verge of bankruptcy at the time of the financial crisis, with a drop in sales of 35% between 2007 and 2009.Read More
The changes in our sector assessments reflect the development of the world economy since the end of 2014, marked by the appreciation of the dollar against other currencies, the oil price collapse and gradual recovery in the Eurozone. These trends have had repercussions on most of the sectors we track.Read More
Advanced countries: stagnation is not destiny for all of them!
In this panorama we first set out a study examining how the advanced economies are facing up to the challenge of weak economic growth since the Lehman Brothers collapse, that is for the past seven years now! Some observers are even talking of "secular stagnation". But, in our view, not all the advanced economies are facing the same challenges regarding this risk of longterm stagnation. We believe that five of them (Belgium, Germany, the Netherlands, South Korea and Switzerland) currently have sufficient strengths to succeed over the nextdecade, when measured according to the five indicators we selected (demographics, innovation, debt, income, inequality and international trade).
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.
Three decades ago Latin America used to be known by negative terms such as dictatorship, debt crises and high inflation. The region's GDP increased by an annual average of only 1.5% in the 1980s. One decade later the rate rose to 2.4% and finally achieved 4.2% between 2003 and 2013. Over the years Latam has begun to be associated with economic growth, new middle class, poverty reduction and controlled inflation.Read More
This end of year panorama starts with the risk assessment of 14 sectors in the three regions we monitor. North America is witnessing major evolutions. Our assessments in this region are improving for chemicals, transportation and textile-clothing. These three sectors are benefiting from the good shape of the American economy and from the fall in oil prices. This drop is particularly helping US airline companies, who are reaping the fruits of their efforts to restructure their activities and By Coface Group Economists improve their margins.Read More
This panorama first contains a study on World Trade. World trade stagnated in the first halfyear 2014 and is struggling to recover nearly 6 years after the start of crisis. This is a radical change in trend after 30 years of unprecedented expansion: World exports are today 10 times higher than in 1980. Even during the past decade, marked by the 2008-2009 crisis, exports increased two and a half times. This raises the following question: is the slowdown in international trade since 2008 only a cyclical phenomenon or does it rather correspond to a lasting structural change?Read More
The Ukrainian crisis has occurred in a context of significant weakening of the Russian economy. In 2013, Russian growth fell to 1.3% after an average GDP progression of 4.8% between 2000 and 2011. The slowdown that Russia is experiencing is not excessively different from that observed in the other BRICS. A number of the major emerging countries have recently been characterised by marked deceleration in investment and, to a lesser extent, consumption.Read More
Since the beginning of the year, the Chinese government has continued its effort to carry out various items on the reform agenda, particularly on fine-tuning the structure of the Chinese economy. While various aspects of reform are underway, growth is by no means forgotten. With plenty of signs showing lackluster growth momentum in this year, it is believed that the government is likely to introduce stronger stimulus to sustain economic growth. More specifically, the continuation of targeted-stimuli is expected.Read More
The single European Union (EU) market for air transport was formed only in 1997. Since then, the traditional airlines have had to compete with low-cost carriers on their short and medium-haul flights. But now, new competition has been developing even more rapidly with regard to long-haul flights: the Gulf carriers. Their traffic, capacity and profitability are expanding more rapidly than in any other region of the world. And, because they have been unable to acquire new air traffic rights, they have stepped up their acquisition of stakes in EU carriers. At a time when it seems vital to tap into Asia's growth potential, European carriers have been hit by this aggressive competition and are among the least profitable in the world. There is much to be learned from the changes observed on the US internal market, liberalised since 1978. Increase profitability, tap into demand where it exists and do better than the new entrants – these are the three main challenges faced by Europe's major, traditional players. Are we seeing the start of a new wave of consolidation like that which occurred in the United States?Read More
Activity in Brazil remains lackluster, inflation stands above the target, interest rates are among the highest in the world, confidence remains at a low level across a variety of indexes and the well-known low investment ratio continues to deteriorate. What is the impact on companies’ payment capacity?Read More
Coface now offers customers a mobile application providing access anywhere and at any time to the essential features of Cofanet, its online platform for managing credit insurance contracts. The application will be available for download at the Apple App Store and Google Play Store.Read More
Such momentum partly came from the dividend of economic bloom of the 2 biggest emerging markets, China and India, during the past decade. However, with growth outlook of these two countries notably lower than the long-term growth trend, Asian economies are by no means not facing zero headwind, and businesses in these economies may need to form different sets of strategies heading into such waves of change.Read More
The group’s 2013 activity report is available. Besides elements on 2013 performance, the report contains general information about Coface, missions, governance, businesses, offer and analysis of the world macroeconomic situation.Read More
PANORAMA COUNTRY RISK - SPRING 2014
This panorama first includes a study dealing with new emerging markets. While the 2008-2009 global crisis had highlighted emerging market resilience, game-changing events have taken place in those emerging countries since May 2013 indeed. The capital outflows linked to political, social and financial tensions attest to the heightened vulnerabilities of certain emerging countries. Their disappointing growth performances only confirm these, especially among BRICS’ countries. Despite this still favourable consumption dynamic in the BRICS, they suffer from supply-side constraints: the downturn in investment is a sign that local businesses no longer have sufficient production capacity to respond to such strong demand. Therefore, we have tried to identify which countries are likely today to take over from them, by paying particular attention to the importance of the outlook for supply and hence for production, rather than for demand and hence consumption.
To do so, we first highlight the emerging economies whose high growth potential is accelerating. These are those with the most favourable prospects of increasing production capacity in the years to come. We then ruled out the countries which do not have a sufficiently developed financial system to support this expansion in production capacity before turning our attention to the importance of the quality of business climate to fully exploit this potential for growth. We identify 10 countries in the end. In five of them (Colombia, Indonesia, the Philippines, Peru and Sri Lanka), the quality of the business climate is similar to the one in the BRICS. Business climate being more difficult in the five remaining countries (Kenya, Tanzania, Zambia, Bangladesh and Ethiopia), it could take more time for them to fully benefit from this high growth potential.
The overall payment experience in China has deteriorated in 2013 comparing to 2012. Key messages from the China Payment Survey are:
Average credit terms extended in China has become longer comparing to 2012
Maximum credit terms has generally been lengthened in 2013 comparing to 2012
Overdue situation has also become more common in 2013 comparing to 2012, with a rising concern of management
A higher percentage of respondents told us that the average overdue-period has been lengthened
45% of the respondents told us that they have seen an increase in overdue amount in 2013, comparing to the 56% in 2012
A broad spectrum of exciting reform plans have been announced, and the government had a series of follow-up actions. But in the near-term, potential negative impacts on the real economy as a result of the reform effort and credit risks associated with the rising cost of fund have to be watched out for.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.
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 contains a study on household consumption in Asia. How big is the rise in household consumption in this region? Have Asian households taken on too much debt? What are the specific consumer behaviour patterns in Asia? Which sectors are benefitting most from this expansion of consumption?Read More
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
Ranked seventh in the world (and the second largest emerging economy) by GDP size, Brazil is the archetypal emerging country. But, the Brazilians’ legendary optimism has been sorely tested for the last two years: Can the Brazilian economic engine be repaired?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
Investors have made it one of their favourite havens during this period of recurrent crises, from global finance to sovereign debt in the eurozone. Proverbial political stability, sound management of public finances, a complex but attractive tax system, many very innovative small businesses and a flexible labour market. Not forgetting, of course, a renowned financial market, making it a major player on the international scene in wealth management activities. These are strengths which sometimes turn into weaknesses.Read More
When public sector job creation runs out of steam, eyes turn to the private sector, which alone seems able to offer a solid basis for recovery in the months to come through investment and the hiring of workers.Read More
Although the overall number of insolvencies continues to decline (-1.8% between September 2011 and August 2012), the summer of 2012 confirms the trend that began last Spring with an important growth in their cost (+17%) and a correlative increase in unemployment (+3.3%). The barometer presented in this panorama analyses this development, principally caused by the difficulties of larger French companies. A list is also given of the riskier sectors, those where risks are deteriorating and those which have been relatively spared.Read More
The United States remains the planet’s leading economic power. As evidence, one need only consider the simple fact that the US consumer accounts for 70% of the US economy and 18% of global GDP. The economic spotlights are therefore focused for very good reasons on rising petrol prices, falling housing prices, unemployment and unequal profit distribution, all of which undermine household confidence. The outcome of the political debate between the Republicans and Democrats over the US budget and national debt as well as the Fed’s orientation and monetary policy as from July are therefore also under close scrutiny.Read More
In Southern Europe, the recession is deepening, particularly in Spain, Italy and Cyprus. Coface is forecasting a recession rate of 2%, 1.8% and 1.3% in these countries respectively in 2012. Another source of concern is the eurozone sovereign debt crisis, which is now affecting growth in emerging countries, where Coface has noted a slowdown in activity.Read More
The «Arab Spring» was rather mild in Morocco, compared with what is still going on in other countries in the region. This results from the role of the king, the Commander of the faithful, but also from the fact that leaders in Morocco have attempted to anticipate the rise of unrest and discontent.
Today, the country has a true asset with its manageable external indebtedness and its solid and dynamic banking sector.However, despite true economic and social progress, and despite the benefits that it derives from phosphates, tourism and better infrastructures, Morocco remains a rural, poor and insufficiently diversified country.
Greece quitting the eurozone would be disastrous. But this long unthinkable scenario cannot be discounted. Even though its likelihood remains below 50%, policymakers cannot afford to sweep it under the rug considering the severity of the Greek financial and economic crisis and the difficulty of implementing unavoidable reforms. This article draws lessons from the financial crises in Russia (1998) and Argentina (2001/2002) in exploring the likely advantages and disadvantages for Greece of withdrawing from the eurozone. What then would be the risk of propagation to the peripheral countries and the consequences for the eurozone as a whole?Read More
Like at the beginning of each year, Coface organized its 16th conference in Paris on 16 January 2012, which has become the flagship event in the field of country risk, one of its main areas of expertise. An exercise, particularly challenging for 2012.Read More
Italy’s economy – the third-largest in the euro zone – is well diversified. Yet the country is currently at the centre of the debt crisis plaguing the single currency zone. Of course, many of the economy’s fundamentals appear sound. The budget deficit did not deteriorate significantly during the crisis, the growth in industrial added-value and a niche strategy help to limit the trade deficit, and household indebtedness is relatively low. But the deterioration in the country’s economic growth potential due to structural weaknesses and the crushing weight of the public-sector debt in a very uncertain international environment are all cause for concern. Given the vast size of this debt and the fact that it is widely held by the European banking sectors, a default by the Italian government would have incalculable consequences on the euro zone’s future. However, the recent formation of a government of experts led by Mario Monti, an economist and former European Commissioner, provides some reassurance of rigour which is a step in the right direction.Read More
After their surge in 2007/2008, prices for farm raw materials began to soar again in June 2010, affecting foodstuff prices worldwide with particularly sharp increases in emerging countries. No other asset class registered jumps in prices as spectacular as those recorded by some farm raw materials with grain prices skyrocketing 36% year-on-year through August. Sugar prices also soared, up 50%. Prices for meat (beef, mutton, chicken) and dairy products rose over 15%. The price increase for rice was more modest with that commodity not traded on the futures market and only a small fraction of its production traded internationally.Read More
Disappointing growth figures for the second quarter of 2011, political tensions in the United States this summer around the question of the debt ceiling and the loss of its triple-A rating, the never-ending sovereign debt crisis in the eurozone, the persistent lack of confidence on the financial markets, tensions on the money market and the vertiginous fall of bank share prices: So many negative signals that are likely to affect the global recovery observed since mid-2009. Global growth in 2011 will settle at 3.2%, representing a slowdown of 1.1 point of GDP compared to 2010.Read More
Global 2011 growth now stands at 3.3% against 3.2% in March. Growth forecasts for industrialised countries are almost unchanged at the projected 1.8%, a net slowdown compared to the 2.5% increase recorded in 2010.Read More
Various events that marked the first quarter 2011 prompted us to revise our world growth forecast for the year, down from 3.4% to 3.2%. And based on virtually finalized data for the fourth quarter 2010, world growth for 2010 comes to 4.2%.Read More
Worldwide growth should be robust in 2011. But how can we analyse its driving forces and risks? Between the United States, where the recovery is hiding the weaknesses of an economic model that is overly based on debt, Europe, weakened by its heavy public debt and eroded competitiveness, and the emerging countries whose dynamism is continuing but needs to find new balances, decision-makers more than ever need reliable decryption and analyses to find their way.Read More
Global Construction: Substantial Geographic Differences, High Sensivity to Economic conditions, Permanent Credit Risk
The global construction sector is a kaleidoscope of diversity with substantial differences between countries and even between the regions of a given country.The sensitivity to changes in economic conditions also varies widely. In general,payment incidents involving actors in the sector are not uncommon. This surveyis intended to enable international trade actors to gain an awareness of the risksand opportunities that characterise this market.Read More