COUNTRY RISK PANORAMA

GRZEGORZ SIELEWICZ

Economist Central & Eastern Europe

6th Coface Country Risk Conference

Sofia, 12th April 2018

2

ACCELERATING GLOBAL GROWTH

Composite PMI index

Source: Coface, Markit

GDP growth

3

EVEN FEWER INSOLVENCIES WITHIN ADVANCED ECONOMIES IN 2018, BUT THE MOVEMENT IS DRYING UP

Coface forecast, national sources

-6%

-2%

-6%

0%-2%

-4% -4%

-2%

-4%-5%

-3%-5%

1%

-1%-3% -3%

3%2%

10%

-1,8%

0%

-3% -3%-1%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Neth

erl

an

ds

Po

rtu

gal

Icela

nd

Au

str

alia

Italy

Fin

lan

d

Sin

gap

ore

Fra

nce

Germ

an

y

Can

ad

a

US

Sp

ain

Den

mark

Jap

an

Taiw

an

No

rway

Sw

ed

en

Belg

ium

UK

Ad

v. eco

.

Eu

rop

e

Eu

rozo

ne

No

rth

Am

.

Asia

Pac.

2017 (f)

2018 (f)

Corporate insolvencies in advanced economies: Coface growth forecasts

4

EUROZONE: BUSINESSES STILL HAVE WORRIES, BUT NOT THE SAME…

-4

-3

-2

-1

0

1

2

85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

Eurozone: Business climate index

0

10

20

30

40

50

60

70

2000-Q

1

2001-Q

1

2002-Q

1

2003-Q

1

2004-Q

1

2005-Q

1

2006-Q

1

2007-Q

1

2008-Q

1

2009-Q

1

2010-Q

1

2011-Q

1

2012-Q

1

2013-Q

1

2014-Q

1

2015-Q

1

2016-Q

1

2017-Q

1

Demand

Labour

Businesses in the Eurozone: Factors limiting production (%)

5

EUROPE: LABOUR MARKET DEVELOPMENTS ARE A CONCERN FOR CORPORATES

Level of capacity utilisation (%)

Job vacancy rates (%)

Source: Eurostat

6

RECOVERY OF EMERGING ECONOMIES: STRONGER AND MORE SYNCHRONISED IN 2018

Source: Coface, IMF

1.2

7.2

5.9

4.7 4.74.2

3.7 3.9

4.44.6

-2

0

2

4

6

8

10

2009

2010

2011

2012

2013

2014

2015

2016

2017(f

)

2018(f

)

1 standard deviation Level

Growth of emerging countries (%, Coface forecasts)

-3 -2 -1 0 1 2 3 4 5 6

Pharma

Chemical

Wood

Transport

Paper

Energy

Textile

Construction

Retail

Auto

ITC

Agro

Metals

Upgrades

Downgrades

Emerging countries: number of Coface sector assessment changes in 2017

7

WORLD TRADE: THE PROTECTIONIST RISK IS SLOW TO MATERIALISE

World trade: Coface growth forecasts

Net number of measures negatively affecting international trade worldwide

Source: GTA, Coface

7.0%

1.5%

4.4%

3.7%

0%

1%

2%

3%

4%

5%

6%

7%

Average2002-2007

2016 2017 (f) 2018 (f)

123 125171

203145 151

81 59105

519

282

307

377453

347

394

315178

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013 2014 2015 2016 2017

Rest of the world

US

8

US: STEEL AND ALUMINUM TARIFFS

US: Direct consumption of primary metals by sector

Source: TradeMap, Oxford Economics, Coface

9

THREAT OF TRADE WAR

US: Products with the largest surplus/deficit with China (Top-10)

Share of particular product exports to the US

Source: UN Comtrade, Coface

10

WHO ARE THE WINNERS OF THE REBOUND IN GLOBAL TRADE?

Source: Eurostat, BIS, Coface

Emerging countries: price competitiveness and exports

Real effective exchange rate

% change since January 2008

11

CEE: SOLID GROWTH STILL ON CARDS

Source: Eurostat, Coface

12

CEE: ONGOING IMPROVEMENT OF THE LABOUR MARKET AMID MODERATE INFLATION

Inflation (%, HICP, y/y)

Source: Eurostat

Unemployment rate (%)

13

CHINA: SMALL-SIZED BANKS ARE ON THE FRONT LINE

China: New credits (in trillion RMB)

6,2 6,3

8,1

1,5 1,9

0,8

4,95,2

4,9

0

2

4

6

8

10

12

14

16

18

2014 2015 2016

Shadow credit (small and medium sized banks)

Shadow credit (Big 5 banks)

Traditional loans

Source: Coface, IMF

14

CHINA PAYMENT SURVEY: IMPROVEMENT HIDES TAIL RISKS

China: Evolution of payment delays relative to 12 months ago

China: Ratio of ultra-long payment delays as a % of turnover

Source: Coface Payment Survey

15

EMERGING COUNTRIES: RECOVERY NIPPED IN THE BUD BY POLITICAL RISKS?

Source: Coface

Coface Index: Risk of Social Turmoil

Final Score Elections in 2018

16

COFACE COUNTRY RISK ASSESSMENTS

17

COFACE SECTOR RISK ASSESSMENTS