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Asia's has been under pressure following from tighter global liquidity in 2018, led by a rapid pace of interest rate hikes by the Federal Reserve (Fed) of the Unites States (US). Narrowing interest rate differentials have led to slimmer risk premiums for investors in Asian emerging markets (EMs). This drove capital flows away from the region and into US dollar-denominated assets. Capital outflows also resulted in depreciation relative to the US dollar, leading a number of central banks in the region to hike rates and to intervene in markets to defend their currencies. The Fed is expected to continue hiking rates in 2019, which could further aggravate outflows. Our index measuring relative vulnerability to outflows points to divergence in Asia. Some markets will benefit from strong fundamentals, proactive monetary policies, and ample buffers to resist outflows. In these cases, it is likely that investors may have gotten ahead of themselves, and current valuations are not justified. However, some economies remain under pressure. Above all, the relative sustainability of the real external position remains the most significant consideration. This is a concern in cases where buffers are inadequate to cover external exposure. Lastly, countries that do not possess flexible exchange rate regimes may struggle to smooth currency fluctuations, as the reach of monetary policy is limited by the degree of dollarization of the economy.
Tüm Coface Yayınları
13 MAJOR SECTORS ASSESSED WORLDWIDE
Coface assessments are based on 70 years of Coface expertise
Financial data published by listed companies from 6 geographical regions
5 financial indicators taken into account: turnover, profitability, the net debt ratio, cashflow, and claims observed by our risk managers
Competition between the South and the East because of their economic similarities
Increased regional protectionism 381 new net measures since 2012
Consequences of the Arab Spring
Uncertain business environment
160 COUNTRIES UNDER THE MAGNIFYING GLASS
A UNIQUE METHODOLOGY
• Macroeconomic expertise in assessing country risk
• Comprehension of the business environment
• Microeconomic data collected over 70 years of payment experience
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.
Coface has been conducting annual surveys covering companies’ payment experiences in China since 2003. The aim of this exercise is to better understand corporate credit management practices and payment experiences. In our latest survey, data collection was conducted during the final quarter of 2017, and valid responses were received from 1,003 companies.
With the ongoing wave of elections in the Central and Eastern Europe region, CEE countries are experiencing a key period of change in a context of political risk and economic acceleration, which currently seem to be the two crucial issues attributed to the region. The region’s average GDP growth rate soared to 4.5% in 2017, i.e. the highest level since 2010. However, local politics and national judiciary system changes are creating problems for the region. Worsening relations with the European Union (EU) and a threat of sanctions for Poland have raised additional concerns.Daha Fazlasını Oku
China has undoubtedly modelled itself as the new champion of globalisation. Nowhere is this felt more strongly than in Asia. Since its accession to the World Trade Organization (WTO) in 2001, the country has positioned itself at the core of the world’s most important supply chains, rapidly becoming the largest trade partner for many Asian economies. More recently, the intensifying rhetoric surrounding China’s Belt and Road initiative1 – aimed at boosting investments in infrastructure and beyond – has led observers to neglect the role played by another regional powerhouse: Japan. Although China may be king in terms of trade, it is considerably behind Japan in terms of investment. But fears surrounding China’s hegemonic dominance in Asia Pacific (APAC) may have been overplayed: Japan remains a key player in this sphere, and will continue to be so for the foreseeable future.Daha Fazlasını Oku
The number of corporate insolvencies in France has continued to decline at the beginning of 2018: -8.3% year-on-year to end of January. This good performance takes place against the backdrop of stronger growth in 2017 (to 2%).
While all sectors benefited from buoyant activity and recorded a decline in business insolvencies, the construction sector performed best, contributing to half of the total decrease recorded. Other sectors – such as services for private individuals, automotive, and clothing – continue to benefit from firm household consumption at the start of this year, driven in particular by the fall in the unemployment rate (8.6% in the fourth quarter of 2017, after 9.3% in the third), a low interest rate environment, and high levels of confidence.
All regions have benefited from this improvement, including Île-de-France, which had recorded four consecutive years of rising company insolvencies. While micro-enterprises saw their situation improve, larger companies posted even stronger performances, reducing the cost of insolvencies, both in financial and employment terms.
The second edition of Coface’s survey on payment experiences in Poland was carried out in December 2017. The year saw a peak period of economic recovery, with GDP growth accelerating to 4.6% in 2017 – the highest level of economic expansion since 2011. This has created favourable conditions for businesses. The payment survey investigated businesses’ payment behaviour, which mirrors both the short-term economic situation and the more structural business environment. Businesses in Poland will likely continue to enjoy a favourable macroeconomic environment. Coface forecasts that the Polish economy will stabilise this year, with GDP growth reaching 3.8% – a slower pace than 2017, but still solid and even broader based. According to our survey, 9 of the 12 sectors consulted anticipate that the amount of outstanding receivables will decrease over the following months. 51% companies expect that their profitability is going to rise in the short-term, whereas 39% anticipate its decrease. The automotive, energy, and textile-clothing sectors in particular expect an improvement in sales. Conversely, the pharmaceuticals, construction, and metals sectors forecast lower sales in the coming months.Daha Fazlasını Oku
The Mexican automotive industry has experienced strong growth since the signing of the North American Free Trade Agreement (NAFTA) in 1993. The sector representativeness rose, from 1.5% of GDP and 8.5% of the manufacturing output in 1993, to 3% of GDP and 18% of manufacturing output in 20151. It is currently the world’s seventh-largest vehicle manufacturer and the largest in Latin America (after overtaking Brazil in 2014). However, the industry’s bright performance is not perceived positively by all. Since the beginning of his election campaign in 2016, United States President Donald Trump has continually attacked the NAFTA. He has blamed the agreement for the deep trade defi cit that the US holds with Mexico (USD 71.1 billion in 20172) and for destroying US jobs. The automotive industry is one of his favourite targets, and not by chance: transportation and related equipment represents roughly 13.9% of total US exports to Mexico and 33.7% of total US imports from Mexico3. Overall, it is the sector with the greatest trade imbalance within the United States.Daha Fazlasını Oku
Türkiye ekonomisi 2017 yılının ilk üç çeyreğinde önemli bir performans göstererek bir önceki yıla göre yüzde 7,4 büyüme kaydetmiştir. Üçüncü çeyrekte ekonomi bir önceki yıla göre yüzde 11,1 büyümüştür; bu G20 ülkeleri arasındaki en hızlı büyüme performansıdır. Özellikle geçtiğimiz yıl ekonomik faaliyeti etkileyen olumsuzlukları göz önüne aldığımızda, bu artış piyasa beklentilerinin oldukça üzerindedir. Bu yılki büyümede temel olarak devlet desteği ile artan yatırımlar ve ihracat belirleyici rol oynamıştır.Daha Fazlasını Oku
The agrofood industry is facing a number of challenges in Europe1, including the central issue of how to share created value. To meet these challenges and consider ways to guaranteea healthy, safe and sustainable food supply, the French government held a General Assembly on the topic of food from 20 July to 30 November 2017. Expanding the organic sector of agricultural production seems to be one of the best ways to achieve this, as this market is booming both in France and around the world. France is the third-largest market for organics in the world (Eur 5.9 billion in 2015, or 7% of the total market; Coface estimates that it is likely to reach Eur 8 billion in 2017), behind the United States (40 billion in 2015 or more
than 40% of the total market) and Germany (11%), and just ahead of China, Canada and the other major European economies.
Coface carried out its second payment survey for Germany this year, making it possible to compare results between the two surveys. Generally speaking, many of the foregone tendencies were somewhat confirmed in 2017. In some aspects, however, improvements can be detected in the payment situations of German companies. The German survey showed that, once again, despite the country’s solid economic situation, nearly 78% of companies are affected by delays in payments. Nevertheless, this ratio has declined by more than 6 percentage points within a year. The positive situation of German companies is also reflected in their assessment of a slight reduction in the financial volumes of outstanding receivables over the past year. Payment delays for the companies surveyed remain within manageable temporary limits. Potential liquidity risks from very long overdue receivables are thus comparably low and are less than in 2016. As a consequence of the improved macroeconomic environment worldwide, the payment experience of export-oriented companies is markedly better than last year. This could also be linked to greater caution in the granting of credit periods.Daha Fazlasını Oku
Business proceedings aimed at insolvencies and restructuring have been on rise in Poland this year. Over the course of the first three quarters of 2017 they increased by 14% compared to the same period last year. Most of the sectors in Poland experienced an increase in the number of proceedings. In contrast, the country’s macroeconomics have been performing well. GDP growth strengthened to 4.0% y/y in the first half of 2017. Economic activity is being driven by household consumption, which remains the main growth engine. Household consumption has benefitted from a further fall in the unemployment rate, which has broken previous record lows. Polish households are also enjoying fair growth in wages and the lowest central bank interest rates in history. Unsurprisingly, within this positive economic environment, consumer confidence indicators are high. Slowly, but gradually, fixed asset investments are becoming more evident and are positively contributing to Polish growth. After last year’s contraction (due to a switch to the new EU budget), investments have started to be fuelled again by infrastructural projects and increasing business capacities. As a result, domestic demand - along with stronger exports supported by strengthening global trade dynamics - is secure enough to keep Poland’s GDP growth at solid levels over the following quarters. This positive economic activity will continue to support companies in Poland, but the first signs of an overheating economy (such as supply constraints and labour shortages) will bring challenges for companies and the pace of expansion. Coface forecasts that GDP growth will reach 3.9% this year, before weakening to 3.5% in 2018. The favourable macroeconomic environment has been supporting Polish businesses. The cross-sector average shows that, during the first half of 2017, companies were able to generate both higher revenues (+9.6%) and profits (+5.4%). Nevertheless, profitability indicators have not been overly impressive. The intense competition present in many sectors is hampering attempts to increase margins, despite growing demand and revenues. The retail sector is an illustration of this trend. Although retail has been benefitting from increased consumer spending, the sector experienced a 59% increase in insolvencies and restructuring procedures during the first three quarters of this year.Daha Fazlasını Oku
The UK automotive industry is entering a dry period. The voices of the main UK industry representatives and their concerns regarding the negative effects of a potential hard Brexit appear to remain unheard, while other difficulties are accumulating against the backdrop of uncertainty. These representatives believe that current negotiations between the UK and the EU are, at this stage, unfavourable to them, despite the Prime Minister recently emphasising the country’s will to remain in the Single Market. The prosperous years of the UK’s automotive industry seem to be a thing of the past. Despite its many advantages, the sector will have to renew itself once again if it is to resist the impact of Brexit. At a time when the automotive sector has to contend with multiple challenges, the prospect of a disorderly exit from the European Union weighs on the capacity of its players to invest and innovate. A weakening of the UK executive adds uncertainty to the future of the sector.Daha Fazlasını Oku
Wolf Warrior 2, released in July 2017, became the first non-Hollywood movie to break into the top 100 highest-grossing film of all time at the global box office. The action movie portrays China as Africa’s protector. Just four days after the release of the movie, China opened its first overseas military base on the coast of Djibouti, embodying the message of the movie. China has demonstrated a particular interest in Djibouti, a small country in the Horn of Africa, as a gateway to the continent, especially since the first Forum on China-Africa Cooperation (FOCAC).
As its name suggests, FOCAC embodies and oversees Beijing’s interest in the entire continent. Since the first Forum was held in 2000, the upturn in economic cooperation between the Middle Kingdom and the African continent has transformed China into a key economic partner for many African countries. However, closer bilateral ties between China and most of its African partners remain centred around China’s growing demand for commodities – particularly mineral resources such as oil, metals and precious stones – and has become subject to increasing scrutiny. Nevertheless, almost 20 years after the inception of FOCAC, it has become necessary to reassess the China-Africa relationship. China’s economic rebalancing towards more domestic consumption is underway, and the slowdown in economic activity is apparent already, despite some signs COFACE ECONOMIC PUBLICATIONS ALL OTHER GROUP PANORAMAS ARE AVAILABLE ON www.coface.com/Economic-Studies-and-Country-Risks of strength in 2017. This should translate into weaker Chinese demand for mineral resources and lower commodity prices – starting with those of crude oil – both of which are lingering tendencies that will reshape the China-Africa bilateral relationship. Declining trade between the African continent and the Middle Kingdom, as well as the shrinking outward foreign direct investment (ODI) flows in the past two years, further reinforce this trend.
On June 5, 2017 Saudi Arabia, the United Arab Emirates, Egypt and Bahrain (known as the quartet) announced they were breaking diplomatic ties with Qatar, due to the country’s relations with Iran and accusations that it supports extremism. The quartet has suspended all air and sea travel links with Qatar, while Saudi Arabia has closed its borders with the country. This means that overland imports of food and other suppliers to Qatar are blocked. Sanctions have had diverse impacts, particularly on trade, capital and human flows. Nevertheless, Qatar, the world’s largest exporter of liquefied natural gas, has been able to soften the effect of the crisis so far, thanks to its reserves of cash and gold. The government has taken immediate and effective measures which, along with rising energy exports, have been able to mitigate the challenges arising from the crisis. Against this backdrop Coface expects the Qatari economy to grow by 3.4% in 2017 and by 3% in 2018 - although this is far below the real annualised growth of 13% recorded between 2005 and 2014.
Impacts of the embargo on the Qatari economy: Under control so far
Growth figures indicate a slowdown in the Qatari economy but this is mainly due to the floundering oil sector and subdued energy prices. Real GDP increased by 0.6% yoy in the second quarter, a slow down from the 2.4% yoy recorded in the first quarter. However, on a quarterly basis, the economy expanded by 0.5% in the second quarter of 2017 – a recovery from the contraction of -1.5% in the first quarter (although figures only cover the first month of the embargo). The lacklustre oil sector was the main reason for the annual slowdown in the economy. The mining and quarrying sector, which accounted for almost half of GDP on constant prices, shrank by 2.7% year on year in the second quarter of 2017, following a contraction of -0.4% year on year during the first three months. The OPEC agreement, which includes production cuts by major oil producers, has negatively affected the sector. In the second quarter of the year, Qatar’s crude oil production fell to 613 thousand barrels per day (tb/d), down from 656 tb/d in 2016 and 663 tb/d in 20151. Non-oil sectors showed a growth of 3.9% year on year in the second quarter of 2017, decelerating from 5.2%. On a quarterly basis, non-oil activity remained flat, indicating that the economy has been affected by the Gulf crisis. Manufacturing output expanded by 1.2% from the previous quarter.
Since Mauricio Macri took office in mid-December 2015, the economy has started to recover. The exchange rate was liberalised during Macri’s first week in office, price controls were removed, import barriers were lifted, discredited national economic statistics were revamped, subsidies were reduced and the holdout saga was finally resolved in April 2016. The last of these measures allowed the country to regain access to the international financial market after a hiatus of 15 years. Coface subsequently upgraded Argentina’s country assessment to B1 in December 2016. The positive trend did however come, as expected, with short term side effects. Inflation picked up to 41 % in the end of the first year of government, reducing household purchasing power and leading the economy into recession (GDP -2.2 % in 2016). Social protests flourished in response.
The recovery could, however, be nipped in the bud by renewed political uncertainties against the backdrop of the legislative elections to be held on October 22 2017. The government is therefore in a rush to show that the economy is rebounding. This has taken longer than the ruling government expected, although activity is finally gaining strength (GDP + 1.6 % in the first half of 2017 on a yearly basis). A takeoff in the rebound will be subject to the outcome of the upcoming midterm elections. Linked to this, investors became more cautious on the country´s medium term political prospects, after former president Cristina Kirchner announced that she would run for the Senate in the province of Buenos Aires. The upcoming elections that will renew one third of Senate and half of the Lower House will be an indication of the potential outcome for the 2019 presidential race. If Kirchner succeeds in gaining a positive outcome, she may try to return to Casa Rosada, thus putting the continuity of the pro-business direction at stake. On the other hand, if the government´s coalition returns a good outcome, this would raise its political capital for passing reforms through Congress.
12 MAJOR SECTORS ASSESSED WORLDWIDE
Coface assessments are based on 70 years of Coface expertise
Financial data published by listed companies from 6 geographical regions
5 financial indicators taken into account: turnover, profitability, the net debt ratio, cashflow, and claims observed by our risk managers
160 COUNTRIES UNDER THE MAGNIFYING GLASS
A UNIQUE METHODOLOGY
• Macroeconomic expertise in assessing country risk
• Comprehension of the business environment
• Microeconomic data collected over 70 years of payment experience
Contrary to 2016, which was characterized by a low economic growth of 1.4%, 2017 is marked by higher expectations with growth expected to exceed 4%. Paradoxically, the question of payment periods and delays has never been more current now in this context.
Especially since the implementation of the new Act 49-15 to develop the regulatory framework governing payment periods in Morocco has fuelled debate. The text provides for, among other things, reducing the legal term between the issuance of the invoice and the final payment to 60 days.
For the third consecutive year, Coface is conducting the Moroccan payment behaviour survey, the aim of which is to monitor the evolution of payment periods and delays. A new development, the 2017 edition also questions companies about their payment behaviour expectations for the next 6 months.
If the year 2017 is synonymous with a slight economic upturn in the emerging markets, let’s not forget the previous three years were marked by increased corporate risk. The reasons for this were numerous: declining commodity prices, high corporate indebtedness, production overcapacity, political risk at the highest level, etc. In this tumultuous environment, businesses have also had to deal with tighter credit conditions from banking institutions.
Restrictive credit conditions in times of crisis is not unique to the emerging world, the subprime crisis being another example. In these circumstances, the bond markets can provide an alternative to bank financing, providing businesses with some breathing space. This is according to Alan Greenspan, the former Chairman of the US Federal Reserve, who went as far as describing the bond markets as a “spare tyre” in 2000.
For once, the summer proved to be particularly quiet. No major events disrupted the path taken by the world economy. While the summers of 2015 and 2016 were marked by the stock market crash in China and then by Brexit, the summer of 2017 was, instead, characterised by historically low volatility on financial markets at the end of July, while numerous stock market indices like the S&P 500 and the MSCI Emerging Markets reached record highs.
Is this situation a source of concern? Does it seem like a potential excess of confidence, and can we fear a possible bursting of a bubble? Could corporate profitability suffer from financial markets turmoil?
On the economic front in appearance, activity is bouncing back, leading us to upgrade 14 sectors (only 2 downgrades). Europe is still on an upward trajectory (upgrade of Hungary, Finland, and Cyprus’ assessments), and capital flows are coming back in large emerging economies, even though they will remain vulnerable to the Fed monetary policy and to political risk. There are more and more signs of recovery in Brazil as well as in Russia. However, Chinese resilience is still masking major vulnerabilities, including a high credit risk, while India has also surprised, with disappointing growth for once in the second quarter. At last, good news in Africa: despite modest growth performances, a busy electoral calendar this summer turned out to be relatively peaceful.
During the commodity super-cycle that lasted over a decade, until around 2014, Latin American economies showed robust performance.
Growth was possible even in the context of generally weak infrastructure. Higher revenues from the exports of primary goods led to the expansion of public and private domestic consumption. Activity throughout these years was driven by the flourish of an emerging middle class and by populist governments that disregarded the cyclical feature of commodities. The setback in international prices, which became more apparent as from mid-2014, had strong repercussions on growth and exposed vulnerabilities in the region. The ensuing weaker terms of trade caused the depreciation of Latin America’s floating currencies against the USD. This depreciation was not enough to boost the competitiveness of manufacturing goods and instead led to the deterioration of trade balances. This, in turn, prompted large twin deficits in the region’s current and public accounts. Following two years of negative growth, regional activity is expected to emerge from recession in 2017. Nevertheless, Coface forecasts a somewhat lackluster performance, of just 1.2%.
Central and Eastern Europe: Less business insolvencies despite temporary headwinds in the construction sector
Despite some slowdown last year, average GDP growth remained at a solid level of 2.9% in Central and Eastern Europe. Economies have been benefi ting from the favourable situation on the labour market, with contracting unemployment rates and rising wages. The improving macroeconomic environment has had positive effects on business. Company insolvencies dropped by 14% in 2015 and a further 6% in 2016. Over the course of last year, 6 entities per 1,000 became insolvent. The regional breakdown reveals a wide variety of dynamics, ranging from a fall of 35.6% in proceedings in Bulgaria, through to a minor increase of 2.6% in Poland and a surge of 56.9% in Hungary. Regionwide however, the downturn in construction activities led to companies within this sector being widely represented in insolvency statistics. Construction consequently took fi rst place in the ranking of fl op sectors in the CEE region.
Coface forecasts that company insolvencies in the CEE region will decrease by 3.9% in 2017 and by 2.3% in 2018. The acceleration in GDP growth and the rebound in investment activity bring further positive signals for businesses. A new fl ow of infrastructural projects, stable contributions from household consumption and the exploration of foreign markets will all be economic supporters. Nevertheless, businesses could experience some challenges, subject to the whims of the global economy and political uncertainties. The latter include the eventual negative consequences of Brexit and uncertainties in Western Europe, with unclear election results in Italy. In addition, there have been local political issues, as seen in the Czech Republic, Poland and Romania. The rebound in investments should be particularly benefi cial for sectors such as construction, transport and the manufacturing of machinery, construction equipment and construction materials. Nevertheless, labour shortages will remain an obstacle for many expanding businesses.
The Top 500 companies generated EUR 580 billion in 2016 – a minor decrease of 0.6% – and experienced a greater downturn in net profit by -3.1% to EUR 26.3 billion. In contrast to the decrease in turnover and net profit, employment rates boomed. The CEE Top 500 companies employed 4.5% of the total labour force in the region, strengthening their workforce significantly by +3.9% to 2.2 million people. This development was reflected in the declining unemployment rates in the region. In ten countries the unemployment rates decreased by even more than 10%, most notably Hungary with -25.0% to 5.1% and the Czech Republic with -21.6% to 4.0%. In most of the CEE countries unemployment rates are now even lower than in Western European countries. The only country which registered higher unemployment figures than the year before is Estonia with +9.7% to 6.8%.Daha Fazlasını Oku
Tighter liquidity conditions in the GCC region since mid-2014…
Oil prices declined by around 75% between mid-2014 and January 2016, with Brent crude prices falling as low as $28 a barrel. Since then, prices have risen back up by nearly 85%, to around $50 a barrel. Nevertheless, persistently low prices are continuing to weigh on liquidity conditions across Gulf Cooperation Council (GCC) countries. Firstly, these countries are still heavily dependent on oil, despite efforts made towards greater economic diversification. Between 2011 and 2014, hydrocarbon revenues accounted for 70% of exports and over 80% of total fiscal revenues, on average1. Secondly, low energy prices have been dragging down governments’ fiscal revenues, which has in turn weighed on the results of corporates and the liquidity of the banking sector. As a result, both financial and business conditions have deteriorated since the beginning of the decline in oil prices. Real GDP growth across the region fell to 1.9% in 2016, down from an average of 4.9% between 2010 and 20152. Growth is expected to edge up marginally, to 2.1% in 2017, supported by the recovery in oil prices.
The slowdown in fiscal revenues and economic growth
has pushed governments in the GCC region to adopt austerity measures such as raising administrative fees, reducing (or even eliminating) some subsidies, cancelling low-priority projects and trying to contain salaries. Governments are continuing to examine measures to raise additional budgets through other taxes and fees (such as VAT, taxes on business profits and income tax). The region’s budgets for 2017 showed reductions in public spending which will lead to the postponement of some important projects. This will make cash flow management more difficult for companies and reduce the opportunities for banks to finance mega-projects (one of their main sources of profitability).
Coface conducts an annual survey to examine corporate payment trends and experiences in eight selected economies in the Asia Pacific (APAC) region. Our corporate payment survey for 2016 showed that non-payment risks escalated on the back of financial stress and a looser approach to credit controls.
Across the eight APAC economies in our survey, the number of respondents offering sales on credit show a slight decrease compared to 2015. Those that did significantly ramped up their credit terms from 55 to 59 days. Only half of the respondent companies checked and monitored buyer credit worthiness in 2016, while one third monitored buyer track records. In addition, there was a notable decline in respondents requesting secured forms of payment. This is a reflection of a looser approach to credit risks.
At the end of the first quarter of 2017, we were wondering whether the timid global economic recovery was a flash in the pan. Three months later, the ongoing recovery seems to be a lasting one, given the economic rally in a considerable number of industrial sectorsand in Europe, even if a few rain clouds on the horizon, in the United States and in China, darken the picture.
In this barometer, we observe that in the United States, the slowdown in consumption, the still unclear outlines of the fiscal stimulus and the investment plan announced by the White House,as well as the rise in interest rates are elementsto be monitored. In the euro area, good newsare accumulating: the easing in credit conditionsfinally boosts business investment; growthexceeds expectations; business confidence hasbeen at its highest for six years; consumer sentimentis on the rise. With the notable exception ofthe United Kingdom, we estimate that businessinsolvencies will decline in Europe and we thusupgrade Spain to A2 from A3 and Portugal toA3 from A4.
One year after the “yes” vote for Brexit, seen as traumatic, the time has come for the United Kingdom to accelerate the implementation of its exit from the European Union (EU). Prime Minister Theresa May wants to have free rein by calling early legislative elections on 8 June, where her victory is expected.
But have British businesses suffered from this decision over the past year? It is clear that the country’s activity and businesses have been globally spared, even though investment has shown signs of decline. The only significant shock has been the sharp depreciation of the pound sterling’s real effective exchange rate in the second half of 2016, which had little positive effect on the activity of exporting businesses but weighed on import costs.
Between 1999 and 2008, Russia’s GDP grew by an average of almost 7% per year. In 2009, the fall in oil prices led to a severe recession (-7.8%). Subsequently, the effect of factors that had supported growth ceased. The further fall in oil prices in the mid-2010s, coupled with an unfavourable international context (declining demand in Europe, sanctions, etc.), led to a contraction in activity for two consecutive years (-2.8% in 2015 and -0.2% in 2016). Between 2009 and 2016, the average annual growth rate was close to zero and the growth forecasts for 2017, again positive, remain very low (1% according to Coface forecasts).
However, in their medium-term development plan1, the Russian authorities are aiming for a minimum annual growth of 5%. The need for a change in growth model, dictated by the changing international environment (a sustained lower level of oil prices) seems to be well accepted by the country’s authorities. It is also urgent for Russia to regain a sufficient pace of growth in activity to halt the deterioration in the standard of living of its population, whose proportion of living below the poverty line exceeded 13% in 2015, compared to less than 11% in 2012.
At a time when businesses are facing a decline in demand and liquidity issues, a sharper look into payment behaviour is a must. Through the initiative of Coface, a world leader in trade credit management and risk information services, a credit pinion survey across the UAE was rolled out in order to map out major shifts and prevailing trends in company payments. The method was strategic and the objective was fundamental: to study how businesses make and receive payments, generating a wealth of economic data and market insights that can support stakeholders in making better informed decisions. The diversified economy of the UAE has weath-ered the volatility of a difficult year, with experts reporting signs of strong recovery. Today, at a time when businesses are getting back on track, revisiting credit policies and realigning strategies, a knowledge of key payment trends comes in handy. Coface ran for the first time ever its Credit Opinion Survey. This is a tool dedicated to understand payment behaviors of the companies. Coface has launched this survey for several years in several countries including China, Morocco, China and Germany. The survey in the United Arab Emirates was the first to be launched in this region.Daha Fazlasını Oku
Labour markets in the Central and Eastern Europe (CEE) region are continuing to improve. Unemployment rates have reached the lowest levels ever recorded and most CEE economies are enjoying lower unemployment than the EU average. Rising wages and low inflation, amid improving consumer sentiment, have made household consumption the main driving force behind economic expansion.
Nevertheless, while households and the region’s overall economic activity are benefiting from these developments, corporates are suffering. The latter are faced with the strengthened wage bargaining power of their employees and are forced to accept higher compensation costs. Dynamic external and domestic demand, the low birth rate and emigration have all contributed to labour shortages. A rising number of companies are reporting this as a barrier to business expansion. Job vacancies are especially high in the Czech Republic and Hungary.
Since the low of 2014, glimmers of recovery have been seen in the construction industry. Corporate insolvencies are declining. French households are increasingly attracted by bricks and mortar as their purchasing power is at its strongest since 2003, particularly due to interest rates also being at historic lows. However, interest rates, which have been rising since the beginning of the year, could ultimately put a damper on household spending should this trend continue. So, if corporate insolvencies in the construction industry continue to decline from now to the end of the year (-7.7% on average in 2017 according to Coface), the power of households to purchase new property will begin to fall by 9 m2 in 2017. Coface expects to see a 18m2 decline in purchasing power between 2016 and 2018. This means that we will be back to 2012 levels in only two years. The current recovery may indeed be short lived.Daha Fazlasını Oku
2016 yılında Çin’deki vadelendirme uygulamaları daha önceki yıllara göre farklılık göstermiştir. Vadeli satış olanağı sunan şirket sayısı azalırken, ortalama vade koşullarında iyileşme kaydedilmiştir. Bu eğilim Çin’de vade kontrollerinde seçici bir gevşemeye işaret etmektedir.
Vadesi geçmiş alacakların ödenmeme risklerinde kayda değer bir iyileşme görülmektedir; ankete katılan şirketlerin sadece yüzde 68’i 2016 yılında vadesi geçmiş ödenme sorunu yaşamıştır (daha önceki beş yılın ortalaması yüzde 80 idi) ve vadesi geçmiş alacak tutarının arttığını bildiren katılımcı şirket sayısı da azalmıştır. Öte yandan, vadesi uzun olan geçmiş alacaklar ile ilgili durum alarm verici bir seviyeye ulaşmıştır; bu durumdaki şirketlerin yüzde 35,7’sinin aşırı uzun (180 günden fazla) vadesi geçmiş alacakları yıllık cirolarının yüzde 2’sini aşmaktadır.
Vadesi uzun olan geçmiş alacak sorunundaki kötüleşmeye ve sürekli olarak değişen piyasa koşullarına karşın, ankete katılan her 10 şirketten sadece yaklaşık 4’ü ödenmeme risklerini azaltmak için alacak yönetimi araçları kullanmaktadır. Bu tablo Çin’de risk yönetimi alanında daha fazla çabaya ihtiyaç duyulduğunu göstermektedir.
Mayıs 2014'te şirket iflaslarında başlayan düşüş Ocak 2017 ayında da devam etti ve Eylül 2012'den bu yana kaydedilen en düşük rakam; 58.031 olarak gerçekleşti (2016 yılı Ocak ayına göre % -2,8). 2017 yılının başı itibariyle yıl boyunca ortalama olarak her 72 şirketten biri iflas etmiştir. (2011 yılında bu rakam 56 idi). Bu eğilimin devam etmesi beklenmektedir. Coface iflaslarda 2017 yılında 2016 yılına göre yüzde 1'lik bir azalma daha olacağını tahmin etmektedir. Coface modelinde GSYH'da öngörülen büyüme ile birlikte şirket marjları dikkate alınmaktadır. Daha iyi haber ise, şirket iflasından etkilenen çalışan sayısı yüzde 2,6 düşmüştür (179.619).Daha Fazlasını Oku
PANORAMA Coface Brazil corporate payment survey
Coface conducts payment studies for a number of different economies, including China, Morocco and Germany. This survey marks the first such edition for Brazil, with the objectives being to better understand the country’s corporate payment habits and the health of its economy.
Brazilian companies are currently faced with a challenging environment. GDP underwent an accumulated contraction of 7.4% during the two years of 2015-2016. Credit conditions deteriorated, against a backdrop of more restrictive credit supply and a tighter monetary cycle (which finally started to marginally ease in October 2016).
PANORAMA:An economic upturn in the face of uncertainty
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 triggereda collapse in the financial markets. In emerging economies, there has even
been a detectable uplift in recent months – but can this last?
PANORAMA POLONYA ÖDEMELER ANKETİ: POLONYALI ŞİRKETLER ARASINDA ÖDEME GECİKMELERİ YAYGIN
Coface’ın Polonya’daki ödeme deneyimlerine ilişkin ilk çalışması ekonomideki geçici bir yavaşlama döneminde gerçekleştirilmiştir. Bu temel olarak yeni AB bütçesine geçişin ve şirketlerin 2016 yılında sabit varlıklara yatırım yapmadaki isteksizliğinin bir sonucu olmuştur. 2015 yılı ile karşılaştırıldığında, Coface 2016 yılında GSYH artışının yüzde 2,7 olduğunu ve 1.2 puan düşüş kaydettiğini tahmin etmektedir. Hem ekonomik durumu hem de iş ortamını yansıtan ödeme anketinde şirketlerin ödeme davranışları incelenmiştir. Analizimiz çok çeşitli şirket büyüklüklerini ve sektörleri kapsamaktadır. Vadeli satışlar yaygın bir şekilde kullanılmaktadır ve birçok şirket bir aya kadar nispeten kısa vade süreleri sunmaktadır. Şirketlerin çoğu vadesi geçmiş ödemeler ile karşı karşıyadır ve bunlardan bazıları uzun süre gecikmiş, ödenmesi çok zor olan alacaklardır. Uzun süreli ödenmemiş alacaklar şirketlerin karlarını düşürmektedir ve ödeme anketimize göre, neredeyse beş şirketten birisi ödenmemiş alacaklar sebebiyle yıllık gelirinin en az yüzde 5’ini silmek zorunda kalmıştır. Dolayısıyla şirketlerin risk yönetim stratejileri hakkındaki farkındalıkları artmaktadır. Birçok şirket özel alacak yönetimi ekipleri oluşturmuştur, ödemeleri sürekli olarak izlemektedir ve ayrıca ticari alacak sigortası şirketlerinden hizmet almaktadır
Coface’s first study on payment experiences in Poland was carried out during a period of temporary slowdown in the economy. This has mainly been the result of the shift to the new EU budget and the reluctance of companies to invest in fixed assets during 2016. In comparison to 2015, Coface estimates that GDP growth was 1.2 percentage points lower in 2016, at around 2.7%. The payment survey investigated the payment behaviour of corporates, which is mirroring both the economic situation and the business environment.
Our analysis covers a wide range of company sizes and sectors. Sales on credit are used extensively, with most companies offering relatively short payment periods of up to one month. The bulk of corporates are faced with overdues, some of which are long and unlikely to be paid. Long outstanding receivables are lowering companies’ profits and, according to our payment survey, nearly one in five companies had to write off at least 5% of its annual revenues, due to unpaid receivables. Corporates are therefore becoming more aware of risk management strategies. Many have put into place dedicated credit management teams, are monitoring payments on a constant basis and are using the services of external credit management providers.
Türkiye ekonomisi 2015 ve 2016 yıllarında birkaç şok yaşamıştır. Artan siyasi belirsizlikler, bölgesel gerilimler, ABD’deki faiz yükseltme süreci, kredi notunun düşürülmesi ve ülke içindeki güvenlik endişeleri turizm gelirlerinin düşmesine, tüketici talebinin yavaşlamasına, yerli ve yabancı yatırımcıların yatırım iştahının azalmasına ve yerli kurun zayıflamasına yol açmıştır ve yerli kurun zayıflamasına yol açmıştır
Bu faktörler ülkenin ekonomik faaliyetin sürdürülebilmesi için ağır bir şekilde bağımlı olduğu sermaye girişlerinde azalmaya katkıda bulunmuştur. Küresel riskten kaçınma eğilimi ve yerel şirketlerin dolar cinsinden borç ödemeleri , bu ortam lirada sert bir değer kaybına yol açmıştır. Bu durum şirketler kesiminin ödeme davranışlarını, yatırım iştahını ve büyüme beklentilerini tehdit etmektedir. Coface Türkiye ekonomisinin 2016 yılında %2,5 ve 2017 yılında %2,7 büyümesini beklemektedir.
Fransa’da Ekim 2016 sonu itibariyle 12 aylık dönemde şirket iflaslarının sayısı düşmeye devam etti (%- 1,0). Bu iyi haberi yılın tamamı için de teyit edebiliriz. Coface 2016 yılı için yüzde 3,8’lik bir düşüş kaydedileceğini tahmin etmektedir. Bu olumlu rakam şirketlerin zayıf büyümeye ayanabilme yeteneklerinden kaynaklanmaktadır. Kar marjlarındaki toparlanma sayesinde (finansal olmayan şirketler için 2016 yılında katma değerin yüzde 32’si olarak tahmin edilmektedir), faaliyette ikinci çeyrekten bu yana gözlemlenen benzer bir yavaşlama kaydedebilirler. 2016 yılında olduğu gibi, kısmen cumhurbaşkanlığı seçimleri ile ilgili belirsizlikler sebebiyle şirket yatırımlarının 2017 yılında çok az ilerleme kaydetmesi beklenmektedir. Yatırım sermayesinin korunması en azından şirketler için kısa vadede faydalı olacaktır. Dolayısıyla 2017 yılında da iflaslardaki azalma devam edecektir (%-1,0). Sonuçlar genel olarak umut vaat edici olmakla birlikte, bazı eşitsizlikler de mevcuttur. Dört sektör özellikle bir yıl önceye göre çok daha fazla zarar ediyor: Hazır giyim, tarımsal gıda, taşımacılık ve kişisel hizmetler. Öte yandan, 2016 yılında iflaslardaki aşağı yönlü trendini teyit eden inşaat sektöründe durum daha teşvik edicidir. Bölgesel düzeyde, Ile-deFrance ulusal ortalamaya göre daha fazla iflas üretmeye devam ediyor. Bunun için birkaç açıklama öne sürülmüştür: Terör saldırılarının etkisi veya ekonomideki en fazla bu bölgeyi etkileyen “Uber’leşmenin” doğal bir sonucu (bakınız Aralık 2016 tarihli Coface panorama).
PANORAMA COMPANY INSOLVENCIES
The number of insolvencies in France continued to fall in the twelve months to end-October 2016 (-1.0%). This good news should be confirmed for the whole year: Coface anticipates a fall of 3.8% in 2016. This positive figure is due to companies’ ability to withstand weak growth. Thanks to a recovery in margins (32% of added value for non-financial companies forecast in 2016), they may register a slowdown in activity, like that observed since the second quarter.
As in 2016, company investment is expected to make little progress in 2017, partly owing to uncertainties relating to the presidential elections. Saving invested capital will at least be beneficial to companies in the short term. They will therefore see another year of declining insolvencies in 2017 (-1.0%)
UBERISATION OF THE ECONOMY IN FRANCE:a new weapon of mass creative destruction?
Why is the collaborative economy so captivating in France? First of all, because it is synonymous with youth and innovation. But also because sectors that are experiencing double-digit growth nowadays are scarce. One swallow does not a summer make—France is even one of the European leaders in this market (1), notably thanks to a favourable regulatory environment (like the special self-employed status in Europe). The transactions carried out in the sector should increase twentyfold by 2025 thus continuing their recent trend: between 2012 and 2014, the number of Airbnb users hosted in Paris multiplied by 8. And 14,000 PHV (French private hire vehicle) companies have been created in France since 2010, this increase resulting from both the economic motivations of users and entrepreneurs and/or a lack of a structural supply.
PANORAMA GERMAN ECONOMY IN 2017: STABLE, BUT NOT STAID
The signs for Germany’s further economic development are promising, with a high level of stability. Coface’s expectations for solid growth therefore come as little surprise. This year’s gross domestic product is expected to grow by 1.8 % (seasonally adjusted and corrected for working days). Growth for next year, at 1.7 %, will only be marginally smaller. Since 2015, Germany’s economy has been growing faster than the potential of 1 to 1.5 % set by the German Bundesbank and several research institutions.
The primary growth driver for 2017 will once again be private consumption, mainly fuelled by the country’s record-high levels of employment. Consumers’ purchasing intentions will gain additional impetus, although less so than in 2016, due to lower increases in real wages resulting from
PANORAMA Dünyada sektör riskleri barometresi
Her üç ayda bir, Coface altı bölgedeki 17 ülke genelinde 12 sektör için bir risk analizi gerçekleştirmektedir. Bu çeyrek için yapılan analizde sonuç bir kez daha açık bir şekilde olumsuz çıkmış ve sekiz sektörün notu düşürülürken sadece bir sektörün notu yükseltilmiştir. Değişiklikler Kuzey Amerika (perakende, tekstil-hazır giyim, kağıtodun ve taşımacılık sektörlerinde riskler artmıştır), Batı Avrupa (tarımsal gıda sektörünün riski artmıştır) ve Orta Avrupa (inşaat ile BT ve haberleşme sektörlerinin notu düşürülürken, taşımacılık sektörünün notu yükseltilmiştir) ile Orta Doğu (BT ve haberleşme sektörünün notu düşürülmüştür) bölgelerini ilgilendirmektedir. Bu çelişkili sektör momentumu, küresel ölçekte kaydedilen risk artışlarından şimdiye kadar nispeten ayrışan bölgelerde dahi dengenin halen istikrarsız olduğunu teyit etmektedir (23 sektörün değerlendirme notu düşürülürken, sadece 10 sektörün notu yükseltilmiştir).
Each quarter, Coface conducts a risk analysis on 12 sectors throughout 17 countries in six regions. For this quarter, the result is clearly negative once again, as eight sectors have been downgraded and only one upgraded. The changes concern North America (increased risks in the retail, textile-clothing, paper-wood and transport sectors), Western Europe(downgrade of the agrofood sector) and Central Europe (downgrades for construction and IT & communications, but an upgrade for the transport sector) and Middle East (downgrade for IT & communications).
This contrasting sector momentum confirms that the balance is still precarious, even in regions that have so far been relatively spared from the rise in risks noted on a global scale (23 sector assessment downgrades, compared to just 10 upgrades for 2016 as a whole).
Abenomi: İlk okun Japonya’nın ihracatı ve yen üzerindeki etkisi çok cılız kaldı. Neden?
2013 yılının başlarında Abenominin uygulamaya konulmasından bu yana, büyük ölçüde uygulamanın ilk oku, yani Japonya Merkez Bankası’nın (BOJ) Nisan 2013’te başlattığı agresif parasal teşvikler üzerinde odaklanıldı. Piyasalar daima daha genişlemeci para politikası çağrısında bulunur ve genellikle bunları olumlu karşılar. Ancak ilk okun etkileri ticaretle ilgili çok sayıda soru işareti ortaya çıkarmıştır. Bu raporda, aşağıdaki iki kilit soruyu daha ayrıntılı bir şekilde ele almayı amaçlıyoruz. I. İlk okun başlangıçtaki başarısı sırasında yende meydana gelen değer kaybı Japonya’nın ticari mal ihracatını neden arttırmadı? Bu sorunun basit açıklamalarından birisi dünyadaki ekonomik büyümenin standartların altında gerçekleşmiş olması ve bunun Japonya’nın ihracatı da dahil olmak üzere küresel emtia ticareti faaliyetlerini baskılaması sebebiyle dış güçleri suçlamak olabilir. Daha yapısal bir sebep ise, Japon ihracatçıların “piyasaya göre fiyatlandırma” davranışıdır. Bu yaklaşım ihracat fiyatlarını yurt içi fiyatların döviz eşdeğeri seviyesinde sabit tutmaktadır (yenin seviyesine rağmen). Dolayısıyla Japonya’nın ihracatına olan talebin canlandırılması sınırlı seviyede kalacaktır. Japon ihracatçıların bu piyasaya göre fiyatlandırma davranışı BOJ tarafından olumlu karşılanmayabilir, ancak büyük ölçüde ihracata dönük olduklarından dolayı, son yıllarda Japon yeninin değer kaybetmesinden bu yana Japon imalatçıların faaliyet karlarının artmasına katkıda bulunmuştur.
PANORAMA MEXICO’S ECONOMY: MORE DIFFICULT TIMES AHEAD
Mexico’s economy has been increasing above the Latin American average since 2012. While the region contracted by 0.5 % in 2015, Mexico, its second largest economy, grew by 2.5 %. Looking ahead however, the outlook is less optimistic. Coface forecasts that the country’s GDP will grow by 1.6 % in 2016 and 1.5 % in 2017.
A less supportive global environment is the key rationale behind this expected slowdown. The US presidential elections have created volatility in the Mexican market, due to its strong economic dependence on its northern neighbour. The less open approach to trade shown by the presidential andidates is also threatening the future of of trade relations. Beyond this political issue, Coface expects that the US economy will continue to slow in 2017 (to record +1.5%, following +1.6% in 2016). Against this backdrop, along with lackluster industrial activity in the US, the Mexican manufacturing sector is likely to disappoint again. Moreover, the slump in oil production, with low international prices, continues to represent a major concern on the fiscal front. Public debt rose to 42.3 % in 2015, up from 38.3 % in 2013, and is expected to reach 45 % by the end of this year.
This deteriorating macroeconomic outlook is clearly having repercussions at micro level. Momentum is therefore slowing in private consumption-related sectors. Coface is downgrading its risk assessment for the country’s retail and automotive sectors, while commodity dependent sectors remain at risk.
PANORAMA LATIN AMERICA: WHY ARE MANUFACTURING EXPORTS STILL LACKLUSTER?
Up until 2014, Latin America’s exports were boosted by China’s vast appetite for raw materials and the hike in their international prices. The region´s abundant natural resources brought economic gains during the commodity bonanza period and it became a major supplier of basic products,
particularly to China. However, this trend resulted in appreciation pressures on exchange rates in many countries in the region. As a consequence, the manufacturing sector became much more exposed to international competition than the primary sector. Local output was thus set aside, in favour of imports, to meet rising domestic demand. Countries in Latin America seemed unable to compete with low-income countries for the production of unsophisticated goods, or with advanced countries for high value products and technological services.
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. The extent of the negative impact of stocks in the second quarter suggests we can forecast a particularly good rebound. Household confidence grew in August, and business confidence continues to outperform its long-term average. The risks facing the French economy remain primarily external, originating mainly from our trading partners who one by one are taking the tricky step of planning a referendum. Coming just a few weeks after Brexit, the Italian government would not survive if the electorate decides to vote against its proposed reforms to the Senate. There is every likelihood that France will suffer a significant economic fallout from any prolongedperiod of political uncertainty in Italy (even though this risk has not yet actually materialised in the case of the UK).Daha Fazlasını Oku
As a follow-up to the survey on Moroccan companies' payment periods published in May 2015, Coface here presents the results of the second edition. Based on the same principle as the 2015 survey, it seeks to analyse changes in Moroccan companies' behaviours and their perceptions of
the economic situation. Companies' payment behaviour remains a relevant indicator of the economic situation. An extension of payment periods and an increase in delays in transactions between companies indicate that they face problems. 2016 will be a difficult year for the Moroccan
economy, which is facing a slowdown in activity because of the poor performances of the agricultural sector. Even though the non-agricultural economy is proving to be resilient, payment periods tend to increase in all sectors and the companies surveyed expect activity to stagnate. Late payments continue to be one of the main obstacles to hiring and investment.
The agrofood sector remains one of the most important sectors for North African economies. Although its contribution varies across the region, in 2014 it accounted for 9.5% of total gross added value in Tunisia, 12.7% in Algeria, 13% in Egypt and 15.6% in Morocco. In 2015, the sector provided employment to 21.7% of the total labour force in Egypt, 15% in Tunisia and approximately 40% in Morocco.
In general, some of the favourable factors boosting the sector include rising populations, increasing demand for processed food, higher per capita incomes and improved production capacities.
Nevertheless, local conditions and government strategies are major influencers on the specific challenges faced by each By Seltem IYIGUN, Coface MENA economist country. In Morocco, the government has been making the development of the agricultural sector a priority since 2008,
ensuring continued levels of investments. In Algeria, the government has recently begun promoting the importance of food self-sufficiency. Rising disposable incomes and changing consumer habits in Egypt have boosted domestic consumption for the agrofood sector.
The year 2015 brought a good mix of conditions for Central and Eastern Europe. Average GDP growth for the CEE region was 3.3% in 2015, after 2.6% in 2014. Economies benefited from rising domestic demand. This included both, growing private consumption, supported by declining
unemployment and growing wages, and increasing investments in most economies. Important support came from EU funds which CEE countries were efficient users of in the final year of validity of the ‘old’ EU budget. At the same time, CEE countries remained active exporters focusing on Eurozone enjoying a GDP growth of 1.6% and looking for new markets.
The CEE Top 500 ranks the 500 biggest companies in the region by turnover.These top players increased their turnover by 4.2% to nearly 593 billion EUR and enlarged their staff by 0.5%. Overall 4.3% of the total labor force in the region is employed by the companies of the CEE Top 500 which has a positive effect on unemployment rates. The ongoing upward trend was also recorded by the majority of the sectors in the CEE Top 500. Twelve out of thirteen sectors increased their turnover compared to the previous year. Strong rises were achieved by textiles, leather & clothing on +14.8% and automotive & transport on +10.3%. The only sector to see a decrease in its turnover was minerals, chemicals, petroleum, plastics & pharma on -8.3%. Favorable business conditions extended into 2016. The forecast for the CEE region in 2016 is nearly on the same level as
2015 with an estimated average growth rate of 3.0%. A further improvement in the labor market and growing confidence will strengthen household consumption as the main growth driver of the CEE economies. The contribution of investments will not be as high as last year due to a slow start of new EU co-financed projects weakening the expansion of the construction sector and various other associated industries. On the external side CEE countries will remain active exporters, although the slowdown in global trade may hamper their ambitions.
PANORAMA US pharmaceuticals have enjoyed their time in the sun, but is it time to get out the umbrellas?
Despite having the highest healthcare expenditure of all industrialised nations (17.1% of GDP in 2013), the US public health outcomes are being outperformed by other advanced nations. Back in 2010, the introduction of the Affordable Care Act (ACA) (1) was designed to correct these shortcomings, in particular by increasing health insurance coverage. Yet beyond this question of coverage, cost has become a crucial issue. Households are finding that the high price of medicines is becoming prohibitive. This has led to a rising call for reform (especially during the presidential campaign). A drop in prices would certainly affect the bottom line of the companies working in this sector, especially the laboratories who would be forced to review their operations and cut back on research D and development (R&D) spending.Daha Fazlasını Oku
2016 marks the first time Coface has carried out a payment survey for Germany. This follows on from other surveys presented this year for China, seven other Asia-Pacific countries and Morocco. The German survey shows that, despite the country’s solid economic situation, nearly 84% of companies are affected by delays in payments. Nevertheless, the positive situation of German companies is reflected in their assessment of a slight reduction in financial volumes of outstanding receivables over the past year. Payment delays for the companies surveyed remain within manageable temporary limits. Potential liquidity risks from very long overdue receivables are thus comparably low.
The picture across the business sectors is mixed. According to Coface’s calculations, payment delays amount to 41.4 days on a cross-sector average. However, some segments report much longer payment delays, particularly the Mechanics and Precision Industries (60.0 days) and Transportation (55.2 days). The Chemicals/Oils/Minerals and IT /Telecommunication sectors have enjoyed the shortest overdue periods.
Questioned on their expectations regarding overdues, the “optimists” and “pessimists” are fairly balanced. While Transportation and the Wholesale trade expect a worsening, Paper/Packaging/Printing and the Mechanics/Precision Industries anticipate significant improvements
China’s ongoing structural reforms have shifted to a greater focus on services and consumption, making the country’s twospeed economy even more evident. The divide between winning and losing sectors is linked to their medium and longer term growth potential, relevant government policies and structural demand.
The sector winners and losers indicate the longer term growth prospects, while Coface’s updated quarterly sector risk assessments point to the short-term credit risks for Chinese corporates in 12 sectors. In general, sector winners likely to enjoy brighter longer term growth outlooks, such as pharmaceuticals and retail, have been assigned with low or medium risk assessments. The Information communication technologies (ICT) segment is an exception to this, being a sector winner assigned with a high risk rating. This would indicate that the credit risks of Chinese corporates in the ICT sector are probably high due to keener regional competition, despite the market’s strong longer-term growth potential.
Coface updates its risks outlook for 12 business sectors in 6 regions every quarter. For the first time, these regional assessments are accompanied by detailed sectoral assessments for 17 countries (see appendixes page 6): United States, Japan, Germany, France, United Kingdom, Italy,
Spain, China, India, Brazil, Mexico, Poland, Russia, Turkey, Saudi Arabia, UAE and South Africa. While the "balance of risks" currently seems to be more even than in Q1 (6 downgrades for 7 upgrades, compared to 9 downgrades for only 2 upgrades in Q1), it continues to mask marked differences from one region to By Coface Group Economists the next. In particular, sectoral risks continue to increase in the emerging world, where 5 of the 6 downgrades have been noted, whereas they have fallen in Europe despite the risks linked to the result of the British referendum.
Unsurprisingly, the sectors linked to commodities retain a high-risk level in all regions, with the slight rise in their prices that occurred during Q2 being of a very modest size at this stage to form a real breath of fresh air. Conversely, the business sectors that rely on household consumption are holding on better in emerging countries, due to the trend towards growth in revenue as well as low inflation being still favourable for consumers. The main exceptions are Brazil, South Africa, Russia and the Middle East (downgrades in distribution, textiles, automotive and food-processing), where the policies of cuts in public spending, subsidies under scrutiny and stricter credit conditions are affecting consumers in the region's countries. The latter are also a source of weakness for the construction sector in Asia, where many companies are highly indebted.
Good growth figures in Europe, rebound in many emerging currencies and oil prices: there was an increasing number of signs of a lull in spring before the British referendum. But this calm is in appearance only, as many "micro" risks appear as soon as we scratch this "macro" surface. And the two largest economies in the world, the United States and China, whose country ratings have been downgraded respectively to A2 and B, perfectly illustrate this tendency. In China, the most widely followed economic indicators, such as GDP growth, retail sales and industrial production, show that growth is stabilising. But company insolvencies are growing sharply. In the United States, hidden behind the continuous fall in the unemployment rate, there are companies whose profitability is being eroded and which are investing less. By Coface Group Economists But the parallels between China and the United States stop there, as these "micro" vulnerabilities are different on the two sides of the Pacific. In China, companies are suffering from overcapacity and excessive debt, which will take time to reduce, while in the United States, companies' problems are more cyclical than structural: six years after the beginning of the recovery process they derived the full benefits from, the turnaround point has been reached and resulted in a rise in insolvencies in early 2016, for the first time since 2010.
If we add Japan (downgraded to A2 in March), it is therefore the three largest economies that are seeing their companies' credit risk increase in this first half of the year. Unsurprisingly, Asian countries are negatively affected by the Chinese slowdown (downgrading of South Korea, Hong Kong, Singapore and Taiwan). Before the British referendum, Europe was - for a change - the herald of good news: the country assessments of France and Italy have actually been revised upwards (respectively to A2 and A3), under the effect of falling insolvencies, earnings that have stopped declining and ever more favourable lending conditions. Central and Eastern Europe is benefiting from the eurozone recovery: Romania, Slovenia, Lithuania and Latvia have been reclassified. In Europe, companies should therefore keep their positive growth momentum over the next few months, unless the consequences of the British referendum and other numerous political
uncertainties spoil the party.
Coface conducts an annual survey to examine corporate payment trends and experiences in 8 selected economies1 in the Asia Pacific region.In 2015, credit extension practices remained largely in-line with those seen in previous years, although there were some signs of more prudent
credit control. Nevertheless, overdue payment risks appear to have increased, adding to financial pressures on Asian companies. Overdue issues varied across different sectors, while the construction, industrial machinery & electronics and automotive & transportation sectors saw a deterioration in ultra-long overdue issues.
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. The capacity to adapt to these shocks is crucial for these countries to be able to continue their journey, especially as financing conditions have deteriorated markedly.Some have taken rapid decisions and adjustments have been made via a more restrictive policy mix, but others have found it more difficult to recognize the unsustainability of their economic policies. Nigeria, for example, after unsuccessfully trying to resist the downward pressures on its currency, decided on 20 June to adopt a more flexible exchangerate regime. But does Sub-Saharan Africa, this land of opportunity, still have wind in
its sails? Are these cyclical shocks likely to By Coface Group Economists continue to hinder these economies' trajectory and jeopardise their growth potential?
These adverse winds will probably persist in the short term, despite the relative stabilisation of commodity prices since the start of the year. Even though the trajectory of the "continent of the future" has been disrupted, and without denying the existence of weaknesses (infrastructure, governance, political stability, etc.), the Sub-Saharan Africa ship is far from sinking. Even the countries that have been weakened the most in the past few years have strong structural points. They could recover in the medium term, thereby providing attractive prospects for companies seeking for opportunities and which are prepared to cast off for an adventurous journey.
Is the recovery finally under way? That is the question being asked after a start to 2016 marked by a series of positive indicators for the French economy. But after several false starts and as many dashed hopes since 2009, caution remains the order of the day. There are grounds for optimism however: growth accelerated in the first quarter and, more importantly, it is no longer solely reliant on household consumption. Business investment appears to be finally picking up and will make a positive contribution to growth this year, for the first time since 2012. The increase in companies' margins made possible by the low oil price and government measures to alleviate the burden on businesses seem to be finally paying off. Company insolvencies are down sharply and are set to shrink by 3.2% for the year as a whole. This trend is reflected in companies of all sizes and in all regions (except for the Ile-de-France and Centre regions).Daha Fazlasını Oku
Hungary is performing well, considering the context of struggling economies globally. Admittedly, since enjoying the podium position for growth among the CEE nations in 2014, Hungary has registered a slowdown, but with 2.9% in 2015 and 2.2% for this year (forecast by Coface), it is still
benefitting from a moderately growing economy. Support from the EU budget will not boost Hungarian growth as much as it did in the previous two years – but with the acceleration of uptake of new EU funds, the positive effects will return next year. 2016 growth will be close to its potential (estimated at 2.5% by the National Bank of Hungary1 ), driven by private consumption, in turn strengthened by falling unemployment, higher disposable incomes, the public welfare programme and the resolution of problems surrounding foreign-currency mortgage loans. These all create opportunities for higher turnover for the retail sector, which is already benefitting from growing retail sales. The sector risk assessment provided in this Panorama shows that impacts are not only stemming from the country’s internal environment and business conditions but also from developments in foreign markets. This is the case for the metals sector, which is suffering from the negative effects of low international commodity prices, in contrast with the transport sector. The automotive sector has benefitted from increasing demand in its core markets.
For the first time, Coface updates its global quarterly sector risk assessments for 12 sectors, in 6 regions worldwide (compared to 3 regions previously). In the current context of flagging global growth, the balance between downgrades and upgrades has unsurprisingly shifted
towardsdowngrades,by nine against two. The two pieces of good news are due to Western Europe. After the catching-up that began in 2013, car sales in this region are now gathering momentum. Coface even expects investments in this sector in 2016, in order to meet strengthened
demand from Europe. Furthermore, the ageing European population is underpinning the pharmaceuticals sector, whose companies are no longer affected by the fiscal austerity measures in Europe. This sector has therefore been reclassified as medium risk. In the wake of the recovery in Western European countries, Central Europe still By Coface Group Economists posts a lower risk level than other regions, even though the chemicals sector is suffering from the Chinese slowdown and the contraction in activity in Russia.
After the heady days of the 2000s, which were marked by the commodity boom and China's massive appetite as it became the largest producer and consumer, the steel sector is finding the aftermath of the party difficult. Eight years after the 2008 crisis, it is still suffering from significant
overcapacity. The structural slowdown in the Chinese economy is obviously one of the main reasons for this development, but other factors are also at work - including the contraction and tertiarisation of activity in the rest of the world and the correlation of steel prices with other non-renewable commodities, which are also falling.
Halved growth between 2010 and 2015, sharply increasing debt, increased exposure to currency risk, growing scarcity and increa-sed cost of credit, falling export revenues: the nerves of companies in a great many emerging countries were severely tested in 2015. The origins of this shock are
now well known: the Chinese slowdown and its impacts on other emerging countries, falling commodity prices since the summer of 2014, reversal of US monetary policy, many supply-side constraints weighing on companies, etc. But while this accumulation of bad news in the emerging world is unprecedented since 2003, such crises occurred already in the 1990s and until after the turn of the century. After these financial crises that already at the time were reflected by massive capital outflows, emerging economies regularly surprised all observers positively by rapidly recovering, to the point that there was talk about “Phoenix miracles” for these economies that thereby seemed to rise from their ashes. Even though many emerging economies are still now in a difficult situation, the question whether they will recover again is arising: can we see this recovery on the horizon or, in other words, is another Phoenix miracle possible in thepresent situation? And if the answer is yes, in which countries?
Sluggish growth, absence of inflationary pressures, ever more expansionary monetary policies and increased volatility in financial markets; these are four elements characterising the global economy in early 2016. This phenomenon seems recent for all countries with one exception: Japan, which has been bogged down in this situation for about 20 years. The lessons from the Japanese “guinea pig” give little ground for optimism: although monetary policy has been highly expansionary for a long time, it has been insufficient to jump-start growth, as providing cheap credit to kick-start demand is of no use in absorbing the excess capacity on the supply side. And as time passes, its detrimental side effects are increasingly visible, as the excess liquidity it creates is giving rise to volatility in financial and real estate markets. So it seems very difficult for a country that has fallen into the stagnation trap to pull out of it. This is of small consolation for companies: despite the weak growth outlook, the fact that financing conditions remain very favourable enables them to survive in a “Japanised” economy. This is confirmed by the decline in company insolvencies in most advanced
economies over the last few months, despite a moderate level of growth in activity.
After five years of sanctions,Iran is finally to rejoin the global community. The return of Iran should have an effect on international growth through the oil channel but above all, will bring huge changes to Iran itself. International sanctions have impacted the Iranian economy. Two consecutive years of negative growth and runaway inflation have tested Iran’s resistance model to its limit. The lifting of the EU embargo will allow Iran to revive its oil sector and return to the global market. The country is perceived as a new Eldorado, with its 78 million potential consumers. More over, with its huge oil and gas reserves, skilled labour force and strategic location, Iran is holding all the cards to become one of the top emerging economies during the next few years.Daha Fazlasını Oku
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).
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. In this environment of increased risks for companies, Coface is downgrading a number of ratings of emerging countries or revising their outlook to negative, in Latin America (Brazil for the 2nd time in less than a year), Africa (South Africa, By Coface Group Economists Algeria, Zambia, Tanzania, Gabon, Namibia, Madagascar), the Middle East (Bahrain), and Asia (Kazakhstan).
2015 yılında Türkiye ekonomisi çeşitli zorluklarla karşıkarşıykaldı . Siyasi bağlamda ülkenin 2015 yılında yaşadığı iki seçim ile birlikte son iki yılda geçirdiği seçim sayısı dörde ulaştı. 7 Haziran seçimleri sonrasında koalisyon hükümeti kurulmasına yönelik görüşmelerin sonuçsuz kalması ile birlikte,ülke 1 Kasım’da tekrar sandığa gitti. Artan siyasi belirsizlik, güvenlik sorunları ve küresel ekonomik endişeler liranın keskin bir şekilde değer kaybetmesine yol açtı ve Eylül ayında lira dolar karşısında tüm zamanların en düşük seviyesine indi.Daha Fazlasını Oku
Brazil has grown over the last decade, as a result of the boom in commodity prices and strong household consumption. The country endured the 2008-2009 crisis, thanks to liquidity injections from public banks. The ratio of total credit to GDP rose significantly during the 6 ears from 2008 to 2014, from 39.7 % to 54.7 %. Moreover, benchmark Selic interest rates fell to their historic lowest level, to 7.25 % a.y. in October 2012. This improvement in credit conditions is in perfect synergy with the country’s emerging middle class. However this movement was not followed on the supply side. Industry became increasingly vulnerable to imports, due to the combination of Brazil’s weak infrastructure and high production costs. These weaknesses were particularly associated with the country’s labour force, as salaries increased well above productivity during the periodDaha Fazlasını Oku
The current global economic situation could be summarised as a gradual recovery for advanced economies and turbulent times for emerging countries. This would not appear to be the case for the emerging economies of Central and Eastern Europe which, in most cases, are on an improving track. Poland is outperforming this regional group. On a microeconomic level, company insolvencies in Poland are mirroring its acceleration in economic growth. Better economic prospects with decreasing unemployment, rising wages and improved consumer and business sentiments, have triggered higher GDP growth and contributed to a decrease in the number of business insolvencies. At the same time, Polish companies remain active exporters and they have been able to increase foreign trade volumes to new destinations, as well as to their core markets. Thanks to a number of improved conditions, insolvencies of Polish businesses dropped by 5.1% in 2014. So far, this year has generated lower dynamics. Insolvencies decreased by 3.3% in the first half of 2015, with economic growth of 3.4% recorded in the same period. Nevertheless, bankruptcies are twice as high as those in the first half of 2008, and the decrease in insolvencies is lagging behind the improved economic environmentDaha Fazlasını Oku
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 generally speaking, 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. While they have benefited from their geographical proximity and sectoral specialisations to trade massively and grow in China’s footsteps since the early 2000s, their integration now seems to be a risk factor, as China has contributed close to 32% to global growth and 72% to growth in emerging Asia since 2000. In this overview we first look at the state of the Chinese slowdown and then identify in what way Asian countries are being affected by the competitiveness losses that have accompanied this reduced vigour of activity. We then identify the countries that are most vulnerable to this development, by mainly focusing on three transmission channels: trade, commodity prices and financing.
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 By Coface Group Economists 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. Many of the commodities exporting countries are also struggling. In this context, emerging currencies have depreciated sharply against the dollar. One minor consolation: India is the only major emerging economy which is not a disappointment, with a growth rate of over 7% this year and next year.Daha Fazlasını Oku
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». With the help of an econometric model, Coface expects the number of company insolvencies to fall in ten countries by the end of 2015, in conjunction with growth outlook for the Eurozone, which is set to reach 1.5% in 2015 and 1.6% in 2016 against
0.9% in 2014. Admittedly a number of risks still wheigh on businesses (such as lower growth prospects in emerging markets), but activity is supported by the fall in the oil price and in the euro, the gradual ending of restrictive fiscal policies and also the Central Bank’s quantitative easing.
In this panorama, we first set out a study examining the economic situation and outlook for SubSaharan 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 risis. This part of the world has managed to benefit from structural reforms, public finances consolidation, significant foreign investments, abundant global liquidity and By Coface Group Economists more stable political environments. The fall in global raw materials prices reshuffles the deck and the sky could turn grey. However, situations differ from one country to another. Some are suffering and will continue to suffer from the deteriorating weather while others, which already started to diversify their economies,should be protected from the storm.
With this issue we are also publishing our quarterly barometer of worldwide trends in country risk. We explain why we have upgraded our risk assessments for Portugal, the Czech Republic and Vietnam. We also explain why we give a negative assessment for the prospects for Algeria, Bahrain, Canada, Gabon, Madagascar, South Africa and Tanzania and why we have downgraded our assessment for China.
Readers will find updated reports for some of these countries setting out their economic situation in more detail at the end of the panorama. Readers will also find updated country analysis for Angola, Argentina and Egypt.
In May 2014, following 5 weeks of legislative elections, India’s Bharatiya Janata Party (BJP) leader – Narendra Modi – became Prime Minister. Elected without the need for allies, this is the country’s first noncoalition government for 25 years. Known to be pro-business, Mr Modi’s election has instilled hopes for reforms in a country where bureaucratic impediments and poor infrastructure have been constraining private and public investments for years. After only one year in power, the Modi administration has already initiated major measures, such as the Goods and Services Tax bill which is expected to boost growth and fiscal revenues, as well as increase the foreign direct investment ceiling in several sectors.
In 2015, India seems to be one the bright spot in the world’s economy and 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? To answer this question, we should first recap on the situation and context of the Indian economy when Mr Modi came to power. We will then review the major policy actions taken by the government so far and their impact on the economy, as well as the challenges that remain. Finally we will analyse sectorial issues, focussing on the sectors which are likely to benefit from the progress in the implementation of reforms – notably the infrastructure, steel and IT sectors.
After a decade of well-implemented reforms and high growth rates, the Turkish economy seems to be struggling to maintain the same growth performance. Coface expects a growth rate of 3.5% this year - still a solid rate, yet below the potential growth rate estimated at 5% and lower than some of the country’s peers. The recovery in the US economy and the Federal Reserve exit strategy have pushed the global economy into a new era. Emerging countries face new challenges due to less available liquidity and structural vulnerabilities. Over the period ahead, the high volatility of the Turkish lira, the recovering but still-fragile growth in Europe and geopolitical risks weighing on the top export markets, are considered as the main challenges for the Turkish economy. Coupled with the general elections in June 2015, these factors are leading to a slowdown in household consumption and investment expenditure.
The textile and clothing sectors are among the most impacted by the developments in the global economy. Regional tensions are also weighing on the export performance of Turkish textile and clothing companies. Coface has increased the textile sector risk assessment to high risk level from medium risk, mainly due to the restrictive impact of the euro’s strengthening on export revenues, increasing import and production costs, the fragile recovery in the core market of Europe, losses recorded in Ukraine and Russia and finally deterioration in companies’ payment performance. The clothing sector currently stands at medium risk level, but is being closely monitored. The pharmaceutical sector remains solid, despite heavy regulations and lower profit margins. Coface evaluates the risk level of this sector as low. The sector is benefitting from the greater access of Turkish
citizens to healthcare services, higher per capita income and higher pharmaceutical expenditure per capita. Although the reference pricing system puts pressure on prices, which in turn restrains investments in new tech-nologies, the sector still has the strong foundations necessary for
steady financial performance. Payment collection is steady, as no delays have been detected in State payments.
Moroccan economy remains resilient during the last world economic crisis and was able to resist to Arab springs. In an increasingly unstable International environment, Morocco remains stable. Implementing an original development model, the country succeed the challenge to accelerate its potential growth when the major big emerging markets slow down. The bet that morocco attempts to meet is not only to develop its traditional sectors, but also diversify its activity towards products and services with higher added value. The country intends to attract more foreign direct investment (FDI), becoming a crossroads between the European Union and the African continent, and enhance its economic relations with Sub-Saharan countries. These developments suggest that Morocco could in the near future, regarding Colombia or Peru, join the group of the “new emerging countries”.
However, this optimism should not hide some persistent fragilities, in particular substantial twin deficits and public debt from several years.
Corporate payment habits and the proportion of overdue payments they record are a good indicator of the health of an economy. Longer payment terms are an indicator not only of a company’s poor financial health but are also likely to have a knock-on effect on all its suppliers. In 2011, Morocco introduced regulation setting out the rules for payment deadlines in order to harmonise company practices in this area. However, there are no studies providing an overview of these practices. After initiating payment surveys in 2003 for China and seven other Asian countries, Coface now intends to replicate this for Morocco. This publication is in three parts. First, we set out the background to the survey conducted. In the second section we provide an overview of payment practices. Finally, we conclude the study with the respondents’ view of Morocco’s economic prospects.Daha Fazlasını Oku
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. The upturn in the Mexican economy began in the 2nd quarter of 2014 and GDP expanded by 2.1% last year. The pick-up in growth has been partly
driven by stronger exports to the United States. Nevertheless, the freefall in oil prices in recent months has raised worries that the energy reform could be impacted, as could the government´s financials. Against this backdrop of headwinds, Coface expects moderate growth ahead (+3.1% in 2015). In this edition of the Panorama we will discuss the current impact of lower oil prices vs Mexican dependence on oil revenues. The overall current macroeconomic environment will also be presented. Secondly we will assess the outlook for the country´s main sectors. This section includes our Mexican sector barometer, which shows the financial performance of companies in different industries, coupled with Coface´s payment experience. The third section focuses on two major industries, illustrating the headwinds the Mexican economy is facing at the moment in the automotive and steel sectors.
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. It then underwent drastic restructuring of its companies, with actory closures, massive redundancies and significant federal support, with $80 billion injected into the Big Three (Chrysler, Ford and General Motors). Since then, the automotive industry has been aided by a highly incentivising "cash for clunkers" programme, by a level of household consumption which has recovered over the last few years thanks, amongst other things, to the drop in unemployment, as well as by tempting consumer finance arrangements. Employment in this sector has started to rise again, as has investment and expenditure on research& development (R&D). A virtuous circleseems to have been established. But we will see that this recovery is not without danger, which could eventually dent the virtue in this circle. Amongst these dangers are a median salary that is still below its pre-crisis level, consumer loans granted to risky borrowers (subprimes), the significant increase in payment defaults and the probable end of cheap loans. To this is added a strong trend amongst new generations of consumers, who increasingly often prefer to use alternative modes of transport, a trend that manufacturers are nevertheless gradually
integrating within their product lines through large increase in their R&D expenditure.
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. So, although the US economy is still robust, we are downgrading our risk assessment for the North American energy sector to medium, because of weakening performance by companies linked to non-conventional oil resources. Conversely, we are upgrading our assessment on European chemicals, which are not only benefiting from falling production costs thanks to cheaper oil and the euro's depreciation against the dollar, but also because of the economic outlook which is improving quarter after quarter. Other sectors are also benefitting from these changes although we have not re-graded them. Costs in the maritime transport sector are also falling due to the lower oil price, but the economic slowdown underway in China is depressing demand. Finally, the automotive sector in Western Europe continues its recovery, symbolised by rising car registrations since April 2014 in Eurozone (+4.2% in February 2015 over one year), although this is not enough to warrant an upgradeDaha Fazlasını Oku
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 isfor 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) By Coface Group Economists 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). With this issue we are also publishing our quarterly barometer of worldwide trends in country risk. With regard to the development of the risks since the end of 2014, weexplain why we have upgraded our risk assessments for Belgium, Cambodia and the Netherlands and give a
positive view on Tunisia's outlook. We also explain why we give a negative assessment for the prospects for Brazil and Ecuador and why we have downgraded our assessment for Sierra Leone. We have also revised our assessments of the business environment in Kuwait, Uganda, Russia and Togo. Readers will find updated reports for some of these countries setting out their economic situation in more detail, at the end of the panorama. Readers will also find updated country analyses for Cyprus, Greece, India, Russia and Nigeria
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, according to Coface forecast. The improved outlook for the Czech main trading partners in the Eurozone has translated into growth of exports which are responsible for 84% of the country’s GDP. A significant part of Czech exports is driven by its automotive industry which arouses to be a country’s specialty. Nevertheless, the domestic demand plays a sizably role in the Czech economic growth, especially now with positive developments on the labour market contributing to rising private consumption.The first part of the Panorama considers the Czech Republic as a manufacturing hub for German and other European investors thanks to relatively cheap and high skilled labour force, geographical
proximity to core markets, solid economic framework and fair business environment. In return for its openness and strong foreign manufacturing presence the economy is quite dependent on European markets, a few industries and global groups.
TÜRKİYE’DE ÖDEME GÜÇLÜKLERİ
2013 yılı Mayıs ayında ABD Merkez Bankası Başkanı Ben Bernanke’nin çıkış stratejisini açıklamasıyla birlikte gelişmekte olan ülkelere karşı finansal piyasalarda risk algısının değiştiği bir döneme girildi. Türkiye bu döneme, yüksek cari açık, ithalata önemli ölçüde bağımlılığı devam eden üretim kesimi ve arka arkaya üç seçim takvimi ile girdi. Yüksek dış borç stoku ve ithalata bağımlı yapı, Türk şirketlerini kurlardaki oynaklığa ve iç talepteki yavaşlamaya karşı kırılgan hale getiriyor. 2014 yılında şriketler, sene başında TL’deki sert değer kaybına, karlarında bir miktar azalmaya katlanarak dayanabildiler. 2013 yılının Aralık ayında başlayan kurlardaki keskin artışlar, Merkez Bankası’nın faizlerini Ocak ayı sonunda sert bir şekilde artırmasıyla denge bulabildi. Ancak kurlardaki bu artışların, firma bilançolarındaki olumsuz etkileri hala devam ediyor. Öte yandan, cari açığı azaltmak amacıyla Bankacılık Düzenleme ve Denetleme Kurumu’nun (BDDK) sene başında uygulamaya başladığı kredi kısıtlama önlemlerinin iç talebi yavaşlatması da firmaların alacak tahsilatlarını zorlaştıran etkenler arasında yer aldı. Bu gelişmelere paralel olarak daha çok yurt içi talebe yönelik üretim ve satış yapan sektörlerin ödeme kapasitelerinde bozulmalar görülmeye başladı. Hem protestolu senetlerde hem karşılıksız çek tutarlarındaki artışlar da bu bozulmaya işaret ediyor. Karşılıksız çekler 2014 yılının ilk on ayında yıllık %5,4 artış ile 15,9 milyar TL tutarına çıktı. Artan faizler ve ivme kaybeden iç talep nedeniyle 2014 yılının ilk on ayında protestolu senetler tutarında da yıllık bazda %9,1’lik bir artış görülüyor.Türkiye’de firma kârlılıkları üzerinde başlıca etkili olan iki unsurun kurların seviyesi ve iç talep olduğu göz önüne alındığında, 2015 yılının ilk çeyreğinde iç talepte görülebilecek ılımlı bir topa rlanmanın kârlara olumlu etki etme ihtimali bulunduğu söylenebilir. Ancak küresel ekonomideki gelişmeler, jeopolitik riskler, ABD Merkez Bankası’ndan beklenen faiz artışı süreci ve yurt içinde genel seçimlerin olması, kurlar oynaklık yaratabilir. Bu durum, firmaların nakit akışlarını ve borçlanmalarını çok daha bilinçli yönetmeleri gereken bir döneme girildiğini gösteriyor. Coface özellikle inşaat ve demir ve çelik dışı metaller sektöründeki risklere dikkat çekiyor.
How do the Middle East and North Africa (MENA) economies perform after the social and political turmoil caused by the so called “Arab Spring” late in 2010? Have social and economic demands of protesters resulted in a healthier economic outlook in these countries?In the MENA region, there was always a dive rgence in economic performance between oil importing and oil exporting countries, which was reflected in the political and social situation. These differences in economic performances seem to have increased despite the protests and demand for revolution since the start of uprisings in the Arab world. The GDP of hydrocarbon exporting countries increased from 4 times that of the importing countries in 2010 to almost 5 times in 2013. The GDP of Saudi Arabia, the highest in the area is nearly three times that of Egypt.The current situation varies across the countries. The Gulf Cooperation Council (GCC) economies continue to record relatively high growth rates, but still below the average growth performance between 2000 and 2010.Daha Fazlasını Oku
The term "deflation" seems to be on everyone's lips in Europe these days, not just on those of economists. The buzz around the term is not surprising, as Eurozone inflation has been falling for the past three years. France is no exception: French onsumer prices rose by only 0.5% year-on-year in October 2014. This slower pace of inflation coincides, moreover, with sluggish growth. As we know, deflation, when it occurs, has considerable consequences for consumers. Initially, a drop in inflation benefits consumers, as it increases their purchasing power. But, the more marked the fall in prices and the longer the fall continues, the more likely this trend is to send the economy into a lasting recession: from the moment households
expect prices to continue to slide tomorrow, they completely lose interest in buyBy Coface Group Economists ing today. In other words, lower prices lead to lower consumption, which in turn triggers another drop in prices. The risk of becoming trapped in this vicious cycle raises several questions: what kind of deflation is one nearest to in France at the moment - a prolonged period of "low-flation" as in Japan in the 1990s and 2000s, or a deep depression as in the 1930s? And what would be the effect of a possible period of deflation on French companies? Are some activity sectors more exposed to this risk than others? The ECB's proactive policy, the availability of abundant liquidity and also the current structures of the French economy allow the risk of "deep deflation" as in the 1930s to be put into perspective. In contrast, the probability of a prolonged period of "low-flation" as observed in Japan from the 1990s seems stronger, even if the position of the French banking sector today appears better than that of the Japanese banks at the time, and the scale of the French property market excesses would seem smaller than that of Japan. Such a scenario would have negative consequences: “low-flation” combined with sluggish growth for the
French economy as a whole, and particularly for the companies in the activity sectors suffering from overcapacities (in particular, industry). But a prolonged period of stagnation would not have only negative effects on businesses. They would benefit from the decline in production costs (notably the one of raw materials) and from lower interest rates. In sum, it signals a change in the pattern of growth: less growth, less inflation, but also more favourable financing conditions and lower production costs for some sectors, as confirmed in 2014, during which the number of company failures stabilised in France, despite growth of only 0.4%
The number of insolvencies at the end of October stood at 63,002 companies, a figure down by -0.9% over the last 12 months. This is the lowest level recorded since August2013. However, the financial cost (total of trade payables over 12 month)
has increased slightly (+0.5%), due to the recent insolvencies of medium-sized By Coface Group Economists enterprises (MSE). Has a cycle of fewer business failures finally begun? Restructuring in certain sectors such as automotives and transport, and the (relative) resilience of French consumption supports that assumption. Nevertheless, insolvencies are likely to remain at a very high level, as the growth in the number of new businesses since mid-2013 could, conver-sely, maintain the number of business insolvencies. Indeed, the first years in the life of a business are associated with a high risk of default. Coface remains cautious, forecasting a decline in company insolvencies for the whole of 2014 of -1.2% to 62,800 and of -0.5% in 2015 to 62,500 business insolvencies. We should not forget that between 2007 and 2008 the average number of company failures amounted to 50,100.
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. hese 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 roup Economists improve their margins. North American chemical companies are gaining advantages through their access to non-conventional oil and gas, and through the upward trend in the activities of their main customers (automotive, onstruction).Lastly, the textile-clothing sector is being strengthened by the dynamics in employment and household consumption. The sudden drop in oil prices constitutes one of the major changes since our last publication. This will give a boost to sectors such as hemicals, but will have a negative effect for oil producers and contractors.Daha Fazlasını Oku
How wealthy is the UAE economy after the debt crisis? Figures indicate that after contracting around 5 percent in 2009, the UAE economy recorded gradually solid growth rates. The economy is expected to grow by 5 percent in 2014, after expanding around 5.2 percent in 2013.Daha Fazlasını Oku
Since the beginning of the year, the Chinese government has continued its effort to carry out various items on the reform agenda, particularly on finetuning 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 expectedDaha Fazlasını Oku
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.Daha Fazlasını Oku
Downgraded to A4 , Brazilian economy gears towards a year of adjustments in 2015. Brazil did not take advantage of the buoyant economy of the past to undertake the reforms needed to modernise its infrastructure and improve the country’s business climate. In terms of market efficiency the country is weak, despite its potential in terms of market size.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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. On top of these evaluations, we provide for each of these major regions a comprehensive overview of developments in distribution, electronics, metals, automotives, phar- maceuticals and services.Daha Fazlasını Oku
In this Panorama, you will find the Coface barometer, which analyzes the evolution of French insolvent companies between November 2012 and October 2013. With a 4.3 % increase during this period, the number of insolvencies (62 431) is now close to the historical peak on the top of the 2009 crisis. However, their financial cost (outstanding amounts of insolvent companies) fell by 7.4%. Now France presents, for «business risk», a more traditional situation with Intermediary size companies less affected (-29%), after having been particularly penalized in the first part of the year, to the detriment of most affected SME / micro-enterprises.Daha Fazlasını Oku
Most countries in Central and Eastern Europe (CEE) are experiencing a slowdown in GDP growth, rising insolvency rates and high unemployment due to the economic crisis in the Eurozone, according to the latest Panorama report from international credit insurer, Coface. However, the company stresses that the picture across the region is not uniform – GDP per capita ranges from just below €3,000 in Ukraine to over €17,000 in Slovenia – and Coface is optimistic that the recovery in Western Europe will have a positive impact, especially on more open economies like Slovakia.Daha Fazlasını Oku
This panorama contains a study on household consumption in Asia. In the face of the 2008-2009 global crisis, followed by the sovereign debt crisis in the eurozone in 2011, Asian household consumption has been a source of relative resilience for the region’s economies.Daha Fazlasını Oku
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.Daha Fazlasını Oku
Ranked seventh in the world (and the second largest emerging economy) by GDP size, Brazil is the archetypal emerging country. It brilliantly passed the test of the major 2009 crisis, demonstrating the strength of its economic fundamentals and the maturity of its political institutions. But, the Brazilians’ legendary optimism has been sorely tested for the last two years: weak growth, loss of industrial competitiveness and, more recently, massive protests by a population that is becoming restive …. Can the Brazilian economic engine be repaired?Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
The report provides readers with a global sector barometer, analysing the situation of fourteen major 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, as well as with company payment behaviour recorded by Coface. There is an overview of each sector, with reference to three indicators pointing to the dynamism, inancial robustness and credit risk of the companies within it.Daha Fazlasını Oku
The global economic slowdown is confirmed this fall, in line with the recession in the eurozone and the emerging market deceleration. Activity in the United States in on a steady path (around 2%), but the improvement in American businesses’ credit risk is flagging in the wake of growing concerns looming over the fiscal policy that will be implemented. Therefore the positive watch placed on the A2 assessment of the United States six months ago is being removed.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku
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.Daha Fazlasını Oku