Annual Report - Scor

The year 2009 contains three distinct periods. The crisis intensified
during the first quarter, leading to fears that the global economy
would collapse. Business in the OECD countries fell by 4.8% in the
first quarter 2009 compared to the first quarter 2008, and by
2.2% compared to the quarter before that. The industrialised
countries were at the heart of this global crisis, and were certainly
responsible for it. In emerging countries, business in the first
quarter 2009 was down by only 2% on average compared to the
previous year. The general atmosphere of panic was sustained by
the freefall of the share markets, which reached their lowest point
on 9 March 2009, when they subsequently also saw a spectacular
rise – an unprecedented event when comparing the current crisis
to previous ones.
This rise actually anticipated future development. In actual fact,
the second quarter was characterised by a stabilisation of business
in the OECD countries (+0.1% compared to the previous quarter)
and by strong recovery in emerging countries. This business
recovery extended to the industrialised countries in the third
quarter (+0.6% compared to the previous quarter) and confirmed
itself by growing in the fourth quarter (+0.8% compared to the
previous quarter). At the end of 2009, the year-to-year variation
in business stood at -0.7% for industrialised countries and +4.3%
for emerging countries, which have been acting as a kind of
global recovery engine. This represents a variation in global GDP
of +1.3%.
The situation is different among industrialised countries. Whilst the
US managed to regain the business level it had at the end of 2008,
Europe, the Eurozone and the United Kingdom appeared to be the
world’s sick men, with a fall in business over the year of 2.3%,
mostly attributable to the UK, Italy and Germany. In fact, the
recovery seems to have stopped in these countries in the fourth
quarter. Nevertheless, studies of the economic situation have
noted a recovery in European business in the first quarter 2010, as
Annual Report SCOR 2009
The economic and financial crisis
weighed heavily on 2009
Philippe Trainar Chief Economist SCOR Group
“ Whilst the US managed to regain
the business level it had at the end
of 2008, Europe, the Eurozone
and the United Kingdom appeared
to be the world’s sick men.”
4
well as continued growth in the United States, although this
includes an adjustment compared to the previous quarter
attributable to a stock correction.
The return of optimism can be seen in the various economic
institution forecasts, which have been regularly upgraded since last
spring. That being said, excessive optimism should be avoided when
analysing the 2009 results. The business recovery during the second
half of 2009 is, in actual fact, marked by a large degree of
uncertainty:
■ in the United States, this is due in large part to the restocking of
companies, which can only provide temporary support for
economic activity;
■ other than stocks, the uncertainty is due to a large degree, if not
exclusively, to increased spending and public deficit (public
consumption, public investments and assistance for the
automobile industry), with no future in the medium term;
■ there is also uncertainty linked to the unprecedented and historic
creation of central bank money, which we are now wondering
how to sterilise, whilst worrying inflationary tensions are
appearing in the Anglo-Saxon countries (the variation in
consumer prices has reached 2.7% in the US and England);
■ the role of global economic engine played by emerging countries,
particularly Asian emerging countries such as China, rests on
worrying imbalances in monetary and budgetary policy and in the
real estate markets.
Major global crises: share prices in the two years
following the start of the crisis
100 = Highest point before the fall
110
100
90
80
70
60
50
40
30
20
10
Starting
point
of the crisis
01/01 of the year
following the beginning
of the crisis
EU 2000
US 1929
Japan 1990
01/01/Y+1
after the beginning
of the crisis
US 2007
US 2000
EU 2007
01/01/Y+2
after the beginning
of the crisis