News & Publications

All Coface Publications

09/26/2018
Economic Publications

Rising Political Risks Cloud Outlook for Asian Economies

Political risks in Asia have increased, according to Coface’s Political Risk Model. Asia currently ranks above the world average in terms of political risk, behind the Middle East and North Africa (MENA), Sub-Saharan Africa and Latin America. Although political risks in Asia have remained broadly stable relative to other parts of the world, some exceptions are notable. These risks could cloud the outlook for some economies going forward. Much of the systemic sources of political risk are related to the continent’s dynamic growth and existing social fragilities. It appears that most of the
increases in recent years have been due to rising political fragilities, associated with a proliferation of less democratic styles of governance.

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08/28/2018
Economic Publications

Businesses in Greece: finally, a fresh start?

With Greece about to pull out of its third bailout package, signs of economic recovery are multiplying: 2017 was a year marked by the return of positive growth (+1.4%), and despite weakening growth in the euro-zone – Greek GDP growth is expected to be close to 2% in 2018, with Greek households and businesses remaining more optimistic in the first half of the year than in 2017. The recent improvement in the economic momentum is far from removing the stigmata of the crisis: from 2008 to 2015, GDP and investment fell respectively by 25% and 60%, the unemployment rate reached 28%, and business turnover collapsed by a third. Wages and property prices halved. Greek banks – despite their recapitalization in 2015 – are still recording high rates of non-performing loans. The International Monetary Fund (IMF) and the European Commission estimate that it will take 10 years before the economy returns to its pre-crisis level. However, reforms undertaken since 2008 have led to a consolidation of the public accounts, which have posted primary surpluses since 2016.

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07/04/2018
Economic Publications

Asia Payment Survey 2018: Regional giants grapple with rising credit risks

Coface’s 2018 Asia Payment Survey covers nine economies. Data collection took place during the fourth quarter of 2017, and valid responses were collected from almost 3,000 companies. Respondents in Asia were under pressure to further extend their payment terms. Average payment terms increased to 64 days in 2017, up from 59 days in 2016. This is in line with the trend observed in Asia since 2015. Payment delays also increased in 2017, according to our survey. The proportion of respondents who experienced payment delays exceeding 120 days increased to 16.5% in 2017, from 12.5% in 2016. Payment delays were longest in China and India; shortest in Malaysia, Taiwan, and Japan. Divergences were also apparent among sectors: the energy and construction sectors featured the highest proportion of respondents reporting payment delays of 90 days or above.

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07/02/2018
Economic Publications

Race for market share in Africa: the European pack is catching up with the French breakaway

In December 2013, the New Economic Partner ship Forum was held in Paris with the aim of reviving trade between France and Africa. At the end of this Forum, then-President François Hollande announced the ambitious goal of doubling trade between France and Africa over five years. A few months later, the drop in oil prices extinguished all hope of achieving this objective and reduced the total value of trade (sum of imports and exports) between these two zones from 73 billion US dollars in 2013 to 54 billion USD last year. In 2017, France also lost its status of leading European supplier to Africa to Germany. This observation symbolizes the continued erosion of French companies’ market share in Africa: exports accounted for almost 11% of flows to Africa at the beginning of the millennium, but halved by 2017 (5.5%).

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06/26/2018
Economic Publications

Barometer country and sector risks barometer Q2 2018

Rising sovereign spreads in the eurozone, increased protectionism, higher oil prices, capital outflows from major emerging countries: warning signals multiplied in the second quarter of 2018. Many of these provoke a feeling of déjà vu, evoking the 2012-13 period. At that time, the International Monetary Fund1 (IMF) stressed that the crisis in the euro area was still relevant, and that rising geopolitical tensions and their consequences on oil prices
were among the main risks weighing on global growth. And, although the IMF reminded us that optimism was in order with regard to the American economy, the risks of falling back into recession (“double-dip”) after the brief 2010-
2011 lull made headlines in many countries throughout 2012. World trade was struggling to recover, in part because of continued protectionist measures from 2009 onwards.

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06/05/2018
Economic Publications

Taking stock of global metal sector trends and outlook

The most-widely traded base and ferrous metals have benefited from a bull market since mid- 2016. Prices have increased on the back of robust global economic growth and technological shifts that have triggered a surge in metal use. Such an uptick in demand has not been observed since the period following the 2008-2010 economic and financial crisis. The use of these metals has been buoyed by highly synchronized growth recovery in the major economies, and has helped the mining and smelting sectors to recover after the end of the commodity super-cycle in the late 2000's.

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06/05/2018
Economic Publications

Turkey Payment Survey 2018: Payment terms expand amid positive economic expectations

This is the first corporate payment survey in Turkey aiming at indicating how payment terms stand in different sectors, how companies manage credit management practices and evaluate future payment experiences. The data collection was conducted in January and February 2018 through phone calls with 2615 companies in 81 cities. While 73% of respondents said they sold with credit terms to their clients, 35.3% of them mentioned they do not have a department responsible for credit management. Only 0.1% said they have a department in charge of trade receivables management.

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06/05/2018
Economic Publications

Political Risk in Latin America: Back to the future?

Latin America has experienced a difficult period since 2014. The slump in commodity prices has impacted activity via several channels (such as lower investments, export revenues, and a tighter public budget). After two years of recession, the region’s GDP growth finally rebounded in 2017 by an
estimated 1.1% year-on-year, and is expected to gain further traction in 2018 (growth forecast: +2.4% YOY). However, this optimistic outlook is linked to favorable global trends than domestic merits. Although a still-gradual tightening monetary cycle in advanced economies (especially in the United States), as well as a soft deceleration in China and the resulting improvement in commodity prices, has aided Latin America, the poor political environment has stained the region’s image in the eyes of much-needed foreign investors – particularly with the multiple political and governmental corruption scandals since 2014.

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05/16/2018
Economic Publications

Western Balkans and the European Union: Political Ties Lagging Behind Economic Ones

Despite regional conflicts, the 2007-08 financial crisis, and the 2009-11 eurozone crisis, Western Balkans countries have developed a close economic proximity with the European Union via a number of regional and bilateral agreements. However, due to institutional, economic, and diplomatic obstacles, accession to the EU will be a long process. At the same time, due to the region’s strategic importance and with the reinforcement of membership conditions, accession (or a pre-accession status) is likely to happen – especially as membership would divert the region from other interested parties (Russia, China).

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04/26/2018
Economic Publications

Currency Risk in Africa: Easing in 2018, but reserves have melted

The exchange rate risk is still relevant on the African continent, as evidenced by the depreciation of the Angolan kwanza by more than 30% since the partial liberalization of the exchange rate regime in January 2018. The shock of falling commodity prices, particularly oil prices from summer 2014
onwards, destabilized many African countries. In the wake of the poor performance of its main economies (Nigeria, South Africa, Angola), the region’s growth slowed to its lowest level for 20 years in 2016. In addition to the slowdown in activity, commodity price developments have resulted in
deteriorating terms of trade1 and downward pressure on most African currencies.

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04/11/2018
Economic Publications

Country and Sector Risks Barometer - Q1 2018 - Beyond the peak of global growth

Positive economic signs continued to accumulate in 2018 during the first quarter. There was sustained growth in investment and a situation of almost full employment in more and more countries, which encouraged households to consume more. Companies are taking full advantage of this virtuous circle and the number of insolvencies in the Eurozone and the United States is expected to fall again this year, by 7% and 5% respectively. According to Coface’s forecasts, Portugal will be the best “pupil” in the monetary union and the country has been reclassified from A3 to A2.

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04/05/2018
Economic Publications

The singularity of political risk in Central and Eastern Europe

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.

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03/20/2018
Economic Publications

Companies in France:fewer business insolvencies, but still just as many “zombies”

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.

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03/20/2018
Economic Publications

Clash of the Titans: China’s rise fuels competition with Japan’s interests in Asia

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.

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03/05/2018
Economic Publications

Mexico Automotive Industry: Headwinds coming from the North

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.

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11/22/2017
Economic Publications

The UK automotive sector and Brexit – or, how to slow a rolling industry?

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 emphasizing the country’s will to remain in the Single Market.

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11/14/2017
Economic Publications

Global growth recovery: A real or a false start?

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.

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11/14/2017
Economic Publications

Morocco: drawing out of payment periods, a perplexing trend?

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.

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11/14/2017
Economic Publications

Argentina legislative elections: is the continuity of the pro-business direction at stake?

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.

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11/14/2017
Economic Publications

Are bond markets the new “spare tyre” for corporates in emerging economies?

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.

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