Mise en page 1 - Euler Hermes

no. 6 

2011 

Global Sectors Review 

Global economic recovery 

continues, but new threats 

are arising 

www.eulerhermes.us no. 6 | 2011 

Economic Outlook

Euler Hermes 

Economic Outlook no. 6 | 2011 - Global Sectors Review 

Contents 

no.6 



Editorial 

page 3 

Business sector 

forecasts 


Indicators 

page6 

Sector analyses 


Food products and beverage > No standing still page 8 

Consumer electronics > Everything is converging page 9 

Pharmaceuticals > Expiring patents page 10 

Automobiles > Idling page 11 

Automotive components > A winner from the crisis page 12 

Aeronautics > Upwinds page 13 

Chemicals > In tune with the health of world trade page 14 

Construction > Dispersed and fragile growth page 15 

Energy > Oil up, nuclear power down page 16 

Air transport > Still under pressure page 17 

Information and communication technology > Forced to innovate page 18 

Contributions 


Statistical 

annex 


Implantations 


 

◾Construction 

◾Air transport 

◾Consumer 

electronics 

◾ Automotive 

components 

◾ Rail, maritime & 

aeronautics equipment 

◾Machinery 

◾Manufacture of IT and 

telecoms equipment 

◾Paper and pulp 

◾Chemicals 

◾Steel 

◾Semiconductors and 


◾Distribution 

◾Food and 

beverages 

◾Pharmaceuticals 

◾Automobiles 

◾Energy 

Euler Hermes Economic Outlook – Global Sectors Review is issued twice annually by Euler hermes analysts of the different companies in the group for the clients of Euler Hermes. 

It is also available on subscription for other businesses and organisations. Reproduction is authorised, so long as mention of source is made. o Publication Director: Wilfried 

Verstraete • Business sectors Manager: Yann Lacroix • Sector economists: Bruno Goutard, Marc Livinec, Didier Moizo • Has also contributed: Dan North• Graphic Design: 

Claire Mabille • Production editors: Anne-Marie Bégoc, Martine Benhadj • Administration: Anne-Marie Bégoc • Translation: Charles Prager – London • For further 

information, contact: the Market Management, Strategic and Economic Studies Department of Euler Hermes at 1, rue Euler, 75008 Paris, France – Tel: +33 (0)1 40 70 53 77 > Euler 

Hermes is a limited company with a Directoire and Supervisory Board, with a capital of 14,691,191.20 euros. • Photoengraving: Evreux Compo, Evreux, France – Permit July 2011 — 

Bull 1173; ISSN 1 162 – 2 881 o July 29, 2011 

2



Editorial 

Facing a flagging recovery: a revival via the 

green economy? 

The world economy achieved growth of better than 4% in 2010, 

admittedly largely driven by the emerging countries (+7% in 2010, 

against only +2.5% in the OECD). However, the initial industrial output 

figures for Q2 2011 show a sharp deceleration in growth, and, to raise 

worries that bit further, you need only to look at the rating agency 

responses to the state of public debt in many OECD countries and, above 

all, their ability to pay off that debt. Indeed, in order to restore market 

confidence in their future repayment capacity, many OECD countries 

have had to implement large-scale austerity plans, one of whose 

consequences will be a fall in domestic demand, and in similar fashion, 

lower production volumes for some of their own industries. A perfect 

illustration of this is the drop in new car sales in two of the countries now 

in difficulty: Spain, where sales fell by more than half between 2007 and 

2010, and Greece, down by nearly two-thirds over the same period! 

But beyond focusing on total gross debt as a percentage of GDP, it is 

the use of that debt on which we need to reflect. Like the emerging 

countries, which benefit from their infrastructure investments 

expenditure to support their growth, the OECD countries could help 

foster their own growth by stimulating investment in the green 

economy. This is a real challenge in this moment of global warming and 

pollution, and meeting it could contribute to sustainable growth. Many 

sectors of the economy would be involved, including research and 

development and hence services, housing (a massive energy consumer), 

all branches of industry, and also agriculture. 

Moreover, this could bring the rise of new industries producing solar, 

wind and tidal energy. The twentieth century was oil; the twenty-first 

could be solar. According to the International Energy Agency (IEA) solar 

power produces only 0.1% of the world's electricity today, but the figure 

could reach 25% by 2050. 

These may seem distant prospects, but we need to start investing now 

in the high value added and low-carbon energy technologies of the 

future, which could well become one of the new driving forces of the 

global economy._Yann Lacroix 

3



International 

Business sectors forecasts 

World 

United States 

Canada 

Japan 

Eurozone 

Germany 

France 

Italy 

Spain 

Netherlands 

Belgium 

United Kingdom 

Central and 

Eastern Europe 

Russia 

Asia 

China 

Latin America 

Mexico 

Brazil 

Food products 

and beverages 

Consumer 

electronics 

Pharmaceuticals 

Automibiles 

Automotive 


Rail and 

aeronautics 

equipment 

Machinery and 


Manufacture of IT 

& telecoms 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paper and pulp 

Chemicals 

Steel 

Semiconductors 

and components 

Construction 

Distribution 

Air transport 

IT & telecoms 

services 

Source: Euler Hermes 

4



Global economic recovery continues, but in many countries industrial 

output has not caught up to pre-crisis levels, and new threats are arising 

Overview: slower growth 

Economic recovery continues quarter 

after quarter, even though significant 

geographical or sectoral disparities 

persist. The impact of the crisis has not 

fully receded, however, and many 

countries, including those in the OECD, 

have yet to return to pre-crisis industrial 

output levels. The emerging countries, 

by contrast, continue to post 

growth rates of close to 10%, generating 

overheating in commodity prices, 

notably in agricultural commodities 

and oil, and this is not without risk for 

some still vulnerable industries, also 

contributing to inflationary increases 

that, in a time of austerity, will be hard 

for economies and households to cope 

with. 

Current situation: uneven recovery 

Our review bears witness to a widespread 

recovery in sectors, although 

some still show evidence of weakness. 

This is the case particularly in 

construction, a sector that is emblematic 

of households’ confidence in their 

future and in the economy’s. Spain and 

the United States have yet to absorb 

their excesses of the pre-crisis years, 

and one may fear that it will take seve- 

ral years before the number of 

construction starts begins to rise. This 

is also the case to a degree in the automotive 

sector, fuelled these past two 

years by the brazen growth in the 

Chinese market (new registrations 

doubling between December 2008 and 

December 2010). The auto sector is 

expected to grow by 3% to 4% in 2011 

(against 25% in 2010), with a surprising 

stagnation in the Chinese market. 

Upstream, however, component suppliers 

are profiting from their global 

presence and from the extensive 

restructuring they carried out during 

the crisis, and they will show high 

levels of profitability and strengthen 

their bargaining power. The same goes 

for the major players in the chemicals 

sector, in the end only lightly bruised 

by higher priced inputs, notably oil. 

Other sectors seem to have mostly 

escaped the crisis, avoiding with any 

genuine challenges. The agrifoods 

industry, with rising volumes by the 

year, needs to absorb the violent price 

rises in agricultural commodities. The 

pharmaceuticals industry similarly 

enjoys structural growth, but will need 

to adapt its business model as drug 

patents expire and fall into the public 

domain, accompanied by the rise of 

generic medicine manufacturers. As 

for consumer electronics and IT, their 

growth will come from their ability to 

innovate. Lastly, aeronautics, a privileged 

industry, enjoys enviably strong 

order books, as shown once more at the 

latest International Paris Air Show. 

Outlook: the challenge of mountainous 

debt 

For the remainder of this year, and for 

2012, large-scale austerity measures 

aimed at cutting the mountains of 

public debt to be paid off will reduce 

household purchasing power, already 

hit by rising inflation rates. Domestic 

demand is thus likely to erode, bringing 

lower sales volumes for consumer 

goods manufacturers, largely located 

in emerging countries – notably China 

– and for, of course, the distribution 

sector. The growth contribution from 

investment could therefore also slow. 

We will watch developments in coming 

months very closely._YL 

Keys to symbols 

Global risk 

AA 

Global risk 

A 

B 

Global risk 

 

Global risk 

C 

Global risk 

D 

Positive fundamentals and outlook 

Fairly good outlook 

Signs of weaknesses 

Structural weaknesses 

Imminent or recognised crisis 

Our business sector forecasts are founded upon the microeconomic expertise 

of Euler Hermes group underwriters and analysts, who closely monitor 

risk in companies worldwide through our network of more than 50 local 

subsidiaries. This results in a qualitative assessment of the health and 

outlook of a sector. Generally, although not in every case, this assessment 

includes growth forecasts for a given sector. We focus more on the health 

of businesses (in terms of margins and solvency) than on their growth in 

turnover. o 

5



Indicators 

Grains 

Petroleum 

Sustainable easing or only a pause? 

Late June brought surprising USDA corn figures, with higher 

than expected planting figures for spring and lower than 

expected reductions (although still to low levels ) in stocks. 

These encouraging prospects for the world's biggest corn 

producer also accelerated the decline in Chicago prices, 

initiated by the contraction in domestic demand (-15.7% yr/yr 

over March-May 2011). The sharp price fluctuations seen 

recently could also reflect the scale of arbitraging by purely 

financial investors. Nevertheless, world supply and demand 

tensions – which spurred the market to record highs in early 

June – still largely persist and point to continued firm prices. 

Moreover, beyond the probable revisions to USDA figures, 

major uncertainties over yields persist (poor weather 

conditions during planting) and over ethanol production 

requirements. For wheat, despite more sustainable 

fundamentals and the announcement of the lifting of Russian 

export restrictions, price trends will inexorably correlate with 

the fate of corn prices, given its status as an alternative 

feedgrain in animal husbandry. Climatic events in China and 

Europe are also likely to impact on coming harvests. _BG 

Down in the short term, up in the long term 

Towards the end of 2010, the uprisings in the Middle East that 

spread to become the ‘Arab Spring’ of 2011, and that cut 

nearly 2% of crude oil production from the world market, 

heightened fears of supply disruptions and probably increased 

speculation. This combination of factors led to oil prices 

rising by 35% from February to April. But the slowing of the 

economy, the uncertainties raised by the problems of US and 

European debt, and the probable withdrawal of speculators 

from the market sent prices back down by 15%. At around 

$110/bbl, however, Brent crude was still thought to be too 

high by some. Saudi Arabia also attempted to keep prices low 

to prevent the fragile OECD economies from further decline. 

At June’s OPEC meeting, the Kingdom advocated higher production 

ceilings to lower prices, but an Iran-led contingent 

opposed the Saudis, and the price later steadied at around 

$110/bbl. In the short term, the slowing in world growth 

should impact on prices, but in the longer term, the extraordinary 

growth in the requirements of China and other emerging 

countries have every chance of sparking another surge 

in oil prices._DN 

World grains production 

Millions of tonnes 

900,000 Corn 

Wheat 

800,000 

Petroleum prices 

USD per barrel 

160 

140 

120 

100 

700,000 

80 

60 

600,000 

40 

20 

500,000 

05/06 06/07 

Sources: Cyclope/USDA 

07/08 

08/09 

09/10 

10/11 11/12p 

0 

00 01 02 03 04 05 06 

Source: New York Mercantile Exchange 

07 

08 

09 

10 

11 

6



Indicators 

Steel 

Semiconductors 

Growth in world output has slowed with Chinese destocking over H1 

At the end of May 2011, world steel output was up by 7% 

annually, for a new record of 1.437 trillion tonnes. But the 

scars of the crisis remain, and the so-called ‘old industrial 

countries’ (OICs) – the US, European Union and Japan – have 

yet to return to their pre-crisis volumes. The major fact in 

recent months has been the near-braking in growth of 

Chinese steel production to just 5% on annual average (even 

so, to 650 billion tonnes) compared to a 24% annual increase 

a year before. Two factors account for this lower performance: 

the slowdown in auto production, alongside destocking by 

the major local actors. This slower growth in Chinese requirements 

has, however, also acted to slow the rise in steel prices 

over the spring. Even so, world steel demand should maintain 

its growth rate over the second half of the year, and Chinese 

output – after destocking – should rise at a more sustained 

rate. As a result, steel prices should again rise in the second 

half of the year, but only by around 3% on average. _YL 

An accelerated return to the realities 

The spectacular recovery in the semiconductor market that 

began in mid-2009 has just ended. While 2010 was a record 

year, with 32% growth in the world market, it also signalled a 

return to normal operating conditions. Admittedly, yearly 

turnover came close to $300 billion. At a certain point, user 

industries quickly began to restock, but just as quickly eased 

off, given that for the past 10 years, prices have fallen by 6% on 

annual average. Semiconductor market growth failed to accelerate 

in Q3 2010, making way for an initial slowing in Q4 

2010 (-3.7% qtr/qtr), the first decline after six quarters on the 

rise. This was before the disaster in Japan, which resulted in 

April 2011 in a 26% drop in deliveries against March levels. 

But production had already started to slow, with world capacity 

utilisation rates down to below 95%. Sharp competition 

continues to be the rule, and Asia Pacific has further strengthened 

its position in the semiconductors market with a 

world market share of nearly 55%, according to figures for the 

first four months of this year. Market price pressures on components 

persist: prices in Taiwan fell by 3% over the first four 

months. With the semiconductors sector once again facing 

its inherent constraints, market growth should be no more 

than 3% by value in 2011. _DM 

Monthly steel output 

Thousands of tonnes 

China 

60,000 EU 

Japan 

50,000 

USA 

Semiconductor markets 

USD billions per quarter 

50 Asia Pacific 

Japan 

Americas 

Europe 

40 

40,000 

30,000 

20,000 

10,000 

30 

20 

10 

0 

06 07 

Source: Worldsteel.org 

08 

09 

10 

11 

0 

05 

Source: WSTS 

06 

07 

08 

09 

10 

11 

7



Global risk 

A 

Food products and beverages 

No standing still 

Overview: a growing industry 

In 2010, activity in the agrifoods sector mirrored the disparities 

in the economic fortunes of nations, with different growth 

patterns separating the developed countries (+6.5% by value 

compared to 2009 in the United States, +3.3% in Italy, +3.0% in 

France and +1.2% in Germany) from the emerging regions 

(+16.1% in China, +13.4% in Brazil). As with the recovery (+13%) 

in world agrifood trade, these figures need to be read in the 

light of the favourable price effects for various products. 

Current situation: cyclical constraints at work 

A recent FAO/OECD report confirmed expectations of an 

increase in average agricultural prices over 2011-2020 (up in 

real terms, against the preceding decade, by 20% for grains and 

by 30% for meat), but to levels nonetheless still below the peaks 

of 2007/2008 and H1 2011. The increase in input costs, 

estimated at between 6% and 10% for 2011, will be exacerbated 

not only by the upward trend in energy prices but also by the 

still growing volatility in other commodity prices (with the 

average monthly variation up by 30% between 2000-2005 and 

2006-2010). In the short term, agrifood businesses will often 

only be able to pass on these costs to their customers 

downstream partially, or even not at all. This is for two reasons. 

The first is the great uncertainty over sales, prompted by 

sluggish consumer spending, and by the manifest resistance of 

distributors (who, like Tesco, have ambitions for their own- 

branded goods). The second is the ever-greater promotional 

activity undertaken by many groups. In the end, the agrifood 

sector, which stood out by avoiding any shock from oversupply 

during the crisis, is facing a different kind of shock, in this 

instance over margins, and this is a particular worry for SMEs in 

the sector. 

Outlook: actions on all fronts 

The classic methods for restoring profitability involve 

optimising industrial operations and attaining critical mass 

(e.g., the merger of Arla Foods and Hansa-Milch) or expanding 

sales (acquisition of Parmalat by Lactalis), in particular in 

emerging regions (acquisitions in Turkey and China by Diageo, 

talks between Nestle and Hsu Fu Chi in China). Manufacturers 

continue to hone their strategic positions by targeting the most 

lucrative segments (Nestlé’s ongoing commitment to 

nutraceuticals, with its purchase of Prometheus Laboratories) 

or moving into more buoyant segments (ConAgra’s continued 

expansion of its private label business in its efforts to acquire 

Ralcorp; or General Mills’ development of dairy products 

activities following its purchase of Yoplait). In addition to such 

efforts, an increasing number of other cost-saving solutions 

will be pursued: portion size reduction, package redesigns, or 

recipe changes (replacement of skimmed milk powder by soya 

proteins by Nestlé in Vietnam), etc. _BG 

Major world food and beverage companies 

Rank Company Nationality Turnover 2010 Change 

USD billions 2010/20009 

1 Cargill USA 107.9(*) N/A 

2 Nestlé Switzerland 105.5 6.5% 

3 ADM USA 61.7(**) -10.8% 

4 Pepsico USA 57.8 33.7% 

5 Kraft USA 49.2 26.9% 

6 AB InBev Belgium / Brazil / USA 36.3 -1.4% 

7 Coca-Cola USA 35.1 13.3% 

8 Unilever UK / Netherlands 30.3(1) 3.7% 

9 Mars USA 30.0 N/A 

10 Tyson USA 28.4(***) 6.5% 

Food production growth, selected countries 

Change Change Change 

2008/2007 2009/2008 2010/2009 

Germany -1.7% -1.0% 0.9% 

Brazil 0.4% -1.4% 4.3% 

USA -1.3% -0.6% 4.2% 

France -0.7% 1.1% -0.5% 

Japan 0.6% 2.0% 0% 

Sources: national statistics 

(*) 

as of 31 may (**) as of 30 june 

(***) 

as of 30 september 

(1) 

only food activity 

Source: companies 

8



Global risk 

B 

Consumer electronics 

Everything is converging 

Overview: the digital age 

Estimated at $340 billion in 2010, the world consumer 

electronics market covers the entire range of hi-fis, videos, 

personal computers, photographic equipment, games and 

mobile phones manufactured for sales to individuals.. Almost 

two-thirds of all production takes place in Asia. Last year 

marked a return to growth (+4% by volume) in this sector that 

was heavily hit by the past economic crisis. The major Korean 

manufacturers (Samsung, LG) came out stronger, at the 

expense of Japanese competitors (e.g., Sony and Panasonic), 

who had long ruled the roost. While all regions saw an upturn, 

the emerging countries were particularly dynamic in 2010, 

even leaving aside the impact of televising the FIFA World Cup 

to a global audience, which played a big part in leading a great 

many households to re-equip themselves with the very latest in 

video equipment. 

Current situation: H1 2011 in line with 2010 

Televisions by far constitute the greatest item by value in 

consumer electronics. In the same way, Blu-ray has completely 

replaced the old VHS equipment, and flat screens have done 

the same to CRT displays. Innovation in this segment continues 

apace, with image quality in flat panel displays improving 

through the use of LED technology, with 3D systems, and with 

increased enthusiasm for connecting to digital TV via the 

internet. The potential sales growth is great, with industry 

statistics showing that less than 10% of TVs purchased 

worldwide offer internet connectivity and only 5% have 3D 

capability. This is a good time for manufacturers, with growth 

opportunities in markets where the household consumption 

share of GDP is on the rise, i.e., in the emerging markets. The 

relocation of global growth from the West to the East, with its 

vast reservoir of buyers for consumer electronics, is clearly 

promising. And this applies not only to less profitable entrylevel 

goods. A study by Accenture shows that, in terms of the 

sales outlook, it is households in the emerging countries that 

are the most receptive to recent innovations, and thus the 

highest margin goods. The percentage of respondents 

planning to purchase equipment within a year is between 10% 

and 20% in the emerging countries, compared to no more than 

5% in the developed countries. 

Outlook: more uncertain in H2 2011 

Despite all this, there are still questions about the industry’s 

continued growth in H2 2011. The Japanese tsunami in March 

stuck part of the sector’s supply chain, taking a number of 

Japanese manufacturing plants out of service. Although Japan 

accounts for only 15% of world electronics production, it is still 

dominant in certain basic electronic components (e.g., flash 

memories). Should the situation there persist, one cannot rule 

out an abrupt rise in material costs for consumer electronics 

manufacturers. If this proves to be the case, and given their 

inability to pass on their added costs downstream, they could 

find it hard to maintain their margins._ML 

Major world consumer electronics companies 



1 Samsung (*) South Korea 81 -1% 

2 Panasonic (*) Japan 39 -3% 

3 Sony (*) Japan 38 -12% 

4 Sharp (*) Japan 30 4% 

5 Toshiba Japan 15 7% 

6 LG South Korea 19 25% 

8 Philips Netherlands 12 -0.3% 

9 Hitachi (*) Japan 11 10% 

(*) 

financial year ending 31 March 

Source: Companies 

World electronics output (consumer and professionnal) 

in % per zone 2010 

Europe 19% 

North America 17% 

Japan 15% 

China 30% 

Asia Pacific (others) 15% 

Rest of the world 4% 

Total 100% 

Sources: Les Echos, Digiworld 

9



Global risk 

A 

 

Pharmaceuticals 

Expiring patents 

Overview: fundamentals reassuring 

Estimated at more than $850 billion in 2010, the global 

pharmaceuticals market offers prospects that other industries 

might decidedly envy. For several years the sector has enjoyed 

average annual growth of around 4% to 5%, driven by rising life 

expectancies across the world and by the sale of new 

treatments for previously incurable conditions. Some 72% of 

global pharmaceutical sales are in the developed countries, 

home also to the major players (Pfizer, GSK Novartis, etc.), yet 

these markets account for no more than a quarter of the 

world’s population. Access to the emerging country markets is 

inevitable over time, but for now offers no immediate remedy 

for the ills affecting the sector. 

Current situation: the patent cliff 

If there were just one present difficulty to focus on for the 

pharmaceutical sector, it would be its now durably deflationary 

situation. The inability of developed countries to stem the 

recurring deficits in their health insurance schemes forces 

their governments to impose price cuts on drug 

manufacturers, lowering the charges to public health 

customers. Also, the now low level of new innovation from the 

industry’s R&D efforts is unlikely to ease the downward 

pressure on prices, with state drug approval agencies each year 

further hardening their standards for approving new 

medicines if they offer no significant therapeutic 

improvement. Even more than this, however, the main danger 

to Big Pharma today is the wave of patents expiring on their 

very profitable blockbuster drugs. The automatically 

deflationary effect of this arises from the immediate 

substitution of their patented original molecules by their 

generic equivalents, once the patented technology enters the 

public domain. Spanning the period 2011-2014, this wave of 

patent mortality has been termed the ‘patent cliff’. At the end of 

2012, for example, 18% of Big Pharma’s 2010 sales (or nearly $78 

billion) will have been achieved by sales of those blockbuster 

drugs with patents expiring in the period, for which competing 

generics constitute an irresistible, much cheaper substitute. 

Outlook: rebooting innovation 

Forced to adjust to this delicate situation, the drug companies 

are implementing rapid restructuring. No longer expecting 

2011 to bring a re-run of their accustomed operating profits 

(averaging 25% over the previous decade), they are in unison 

cutting their workforces, selling plants to sub-contractors, 

pursuing external growth through diversification, or moving 

into new therapeutic areas from which they were previously 

absent. This is what motivated the high purchase price paid by 

Sanofi to acquire Genzyme earlier this year. Moreover, the 

industry is working to reboot the very heart of its vital force – its 

R&D creativity – notwithstanding that this is proving much 

more difficult than expected._ML 

Major world pharmaceutical companies 



1 Pfizer ( *) USA 68 36% 

2 Johnson & Johnson USA 62 -2% 

3 Novartis (*) Switzerland 51 14% 

4 Merck ( *) USA 46 68% 

5 Roche Switzerland 46 1% 

6 GSK UK 44 -1% 

7 Sanofi-Aventis France 40 -1% 

8 Abbott ( *) USA 35 14% 

9 AstraZeneca UK 33 2% 

10 Bristol-Myers Squibb USA 20 4% 

(*) 

Not comparable (large-scale external growth) 

Source: laboratories 

Global shares of world pharmaceutical sales, 2010 

Region 

Share 

North America 41% 

Latin America 6% 

Japan 9% 

Asia, Oceania, Africa 16% 

Europe (included Russia) 28% 

Source: Chimie Pharma Hebdo 

10



Global risk 

A 

Automobiles 

Idling 

Overview: driven by the emerging markets 

The year 2010 confirmed the spectacular recovery in the world 

automotive market, with output rising to 77 million vehicles 

(+25%, after -14% in 2009). The reason for this, to say the least, 

enormous recovery, is the remarkable 33% growth in China in 

2010, after an already 48% jump in 2009, to 18 million vehicles, 

including 13.8 million cars. This is nearly 25% of world 

production, against a share of less than 4% in 2000! Over the 

same period, Western Europe’s share fell from nearly 30% to 

just 15%, while the US share dropped from 22% to 10%. The 

automotive world has been through a radical change over the 

decade, yet the actors are overall the same ones as before, with 

western automakers still dominant. 

Current situation: moderate growth in 2011 

Against all expectations, new registrations in China at the end 

of May showed no growth (yr/yr), with the market steadying at 

14 million units, due to the end of stimulus and due to 

environmental constraints. However, in order to avoid blocking 

growth in the market, the authorities are looking at 

implementing a new scrappage incentive, targeted exclusively 

at rural areas, at between $1,700 and $2,800 dollars for new car 

purchases when scrapping vehicles over six years old. In India, 

the market is growing by an impressive 25%, although the size 

of the market remains a modest 2 million units annually. Sales 

in Brazil continue to rise at a reasonable 5%, to 2.7 million units 

annually. In the mature markets, Europe has steadied at sales 

of around 13.5 million units, well below its pre-crisis level of 

between 15.5 and 16 million units, explaining the existence of 

large production overcapacities. The US market is confirming 

the recovery that began in H2 2010, at 12.5 million units 

annually, but this is still well below its pre-crisis level of more 

than 17 million. For its part, the Japanese market began to 

decline in H2 2010 and now finds itself particularly affected by 

the impact of the earthquake that struck in March. Automotive 

production has dropped dramatically, falling by 60% in April 

and by another 32% in May. 

Outlook: towards a new growth model? 

Growth in the world automotive market should steady at 

between 3% and 5% in 2011, with a question mark over a 

potential (but temporary) fall in Chinese sales. 

In an environment marked by increasingly stringent 

environmental constraints, and by oil prices that can only 

increase, manufacturers need to develop new methods for 

powering vehicles. Hybrid vehicles, hydrogen fuel cells, and 

electricity-powered engines are all now being explored. On top 

of the geographical changes at work in the world market, the 

challenge for the next ten years will be in developing clean 

energy technology. _YL 

Major world automakers 

Rank Company nationality Turnover 2010 change 


1 Toyota Japon 216,4 0% 

2 Volkswagen Allemagne 168,7 20% 

3 General Motors (1) Etats-Unis 135,6 ns 

4 Daimler Germany 130.0 24% 

5 Ford USA 129.0 9% 

6 Honda (*) Japan 101.8 4% 

7 Nissan (*) Japan 99.9 24% 

8 Hyundai South Korea 97.4 24% 

9 BMW Germany 80.4 19% 

10 Peugeot France 74.6 16% 

11 Renault France 51.8 16% 

12 Fiat (2) Italy 47.7 ns 

(*) For the Japanese groups, figures represent turnover for FY ending 31 March, 2011 

(1) FY 2009 not comparable, GM came out of Chapter 11 in June 2009 

(2) Changed basis for Fiat on January 1, 2010 (demerger of non-auto activities into Fiat 

Industrial S.p.A.) 


Private and commercial vehicles output 

2007 2008 2009 2010 Change 

2010/2007 

China 8,882,456 9,299,180 13,790,994 18,264,667 105.6% 

Japan 11,596,327 11,575,644 7,934,057 9,625,940 -17.0% 

USA 10,780,729 8,693,541 5,731,397 7,761,443 -28.0% 

Germany 6,213,460 6,045,730 5,209,857 5,905,985 -4.9% 

South Korea 4,086,308 3,826,682 3,512,926 4,271,941 4.5% 

Brazil 2,977,150 3,215,976 3,182,923 3,648,358 22.5% 

India 2,253,729 2,332,328 2,641,550 3,536,783 56.9% 

Spain 2,889,703 2,541,644 2,170,078 2,387,900 -17.4% 

Mexico 2,095,245 2,167,944 1,561,052 2,345,124 11.9% 

France 3,015,854 2,568,978 2,047,658 2,227,742 -26.1% 

United Kingdom 1,750,253 1,649,515 1,090,139 1,393,463 -20.4% 

Italy 1,284,312 1,023,774 843,239 857,359 -33.2% 

Source: OICA 

11



Global risk 

B 

Automotive components 

A winner from the crisis 

Overview: benefits from globalisation 

Faced with the divergent development of certain regional 

automotive markets, the presence of the major component 

manufacturers on all markets allowed them over 2010 to 

regain their pre-crisis levels of activity. This global presence 

also improves their bargaining power with their clients. Lastly, 

their technological advances, resulting from their high level of 

research and development activities, especially in 

environmental matters, strengthens their position in the value 

chain and allows them to realise good profitability levels. 

Current situation: good financial performances 

After an almost 50% collapse in activity in late 2008 and early 

2009, component manufacturers had no choice but to adapt 

their productive apparatus in order to survive one of the worst 

crises ever suffered by the sector. Those that stood up to the 

crisis emerged stronger and bigger, and took advantage of the 

recovery in volumes. They thus achieved levels of profitability 

rarely seen in the last decade. This positive trend was 

confirmed in H1 2011 for global operators. Indeed, after the 

Chinese boom of 2009 and 2010, this market is now in a phase 

of stabilisation. Component manufacturers now have to look 

elsewhere for growth: in India, in Russia, and also in North and 

South America. After posting operating margins of around 3% 

in recent years, profitability is now averaging 5% to 6% of 

turnover. Their improved financial performance allows them in 

turn to further increase their R&D investment in clean 

technologies, further strengthening their bargaining power. 

The crisis may possibly have turned the tables, with the truly 

global players in the automotive sector being the major 

component manufacturers, and they could well become the 

sector’s strongest players. 

Outlook: further strengthening R&D to become key players 

Environmental constraints, with the cuts imposed on CO 2 

emissions, and ever increasing oil bills create new challenges: 

cutting vehicle weights, reducing engine capacities and 

reducing tyre drag. And there are other challenges: developing 

new micro-hybrid technology (cutting power to the engine 

when a vehicle has stopped), hybrid technology (thermal and 

electric motor combinations), all-electric systems, and other 

propulsion methods. At present, there are many projects 

underway, at various stages of advancement. Component 

suppliers clearly have a part to play in technological advances, 

and constructors are prepared to pay dearly to achieve CO 2 

emission cuts of just a few grams. While the challenges are 

many, the outlook for the major global component suppliers is 

good, in terms of both volume and of profitability. _YL 

Major world auto component companies 



1 Bosch Germany 62.9 24% 

2 Johnson Controls (1) USA 34.3 20% 

3 Denso (*) Japan 35.7 5% 

4 Aisin Seiki Japan 25.7 10% 

5 Magna Canada 25.0 27% 

6 Mobis South Korea 19.2 29% 

7 Faurecia France 18.3 48% 

8 TRW USA 14.4 23% 

9 Delphi (2) USA 13.8 ns 

10 Valéo France 12.8 28% 

(*) 

Figures for the Japanese groups are for the half year to the end of September 2010 

(1) 

For Johnson Controls, figures are for annual accounts to the end of September 2010 

(2) 

Non-compararable; Delphi came out of Chapter 11 on October 6, 2009 


New car registrations by region, personal vehicles 

12 mos. to 31 May 12 mos. to 31 May Change 

Market 2011 2010 2010/2009 

Europe-30 13,721,466 14,619,924 -6.1% 

Russia 2,272,947 1,436,305 58.2% 

USA 12,542,070 10,913,827 14.9% 

Source: OICA 

12



Global risk Aeronautics 

B 

Upwinds 

Overview: internationalisation underway 

Alongside constructors from the major manufacturing zones, 

the US ($48.2bn in 2010) and Europe ($33.4bn in France, 

$21.4bn in Germany, etc), players from Canada ($22.4bn in 

2009), Japan ($6.2bn in 2009) and Brazil ($5.5bn) are 

positioning themselves to gain increased shares in the world 

civil aviation market, with also Russian and Chinese 

constructors now offering credible alternatives. 

Current situation: very different flight paths… 

In the business aircraft market, down by 20% in Q1 2011, an 

improvement will come with a more rapid absorption of stocks 

of used aircraft (by 2012). The market for regional aircraft 

remains also limited, after two years of contraction (from 218 

deliveries in 2008 to 141 in 2010). A number of factors – stiffer 

competition (in the form of China’s ARJ-21, Japan’s MRJ and 

Russia’s SuperJet), the attractiveness of turboprop engines for 

50-70 seat aircraft and the greater interest among airlines for 

larger capacity aircraft – are all encouraging the industry 

leaders in this sector, Bombardier and Embraer, to continue 

redefining their own strategies. For commercial aircraft, 

however, this is a time of great optimism: the conclusion of the 

International Paris Air Show saw orders totalling $72 bn for 

Airbus, $22 bn for Boeing and a revival in sales of the C-Series 

from Canada. But alongside this good outlook on activity for 

2011, profitability, while admittedly positive, is being 

negatively impacted by the problems affecting certain 

programmes: in the case of Boeing, its B787 (an undeniable 

commercial success, but offset by very considerable and 

therefore costly delays), and, for Airbus , the problems 

surrounding both its A350 (R&D investments, and a six-month 

slippage from its original schedule) and its A380 (which will 

only turn profitable in 2014-2015). 

Outlook: awaiting answers 

With a steady increase in the pace of deliveries up into 2014, 

and, at the end, the start of production of new models, the 

single-aisle segment will remain the spearhead of the world 

aeronautics industry (70% of deliveries over 20 years, totalling 

around $2 trillion). Besides the growing needs of Asian airlines 

and low cost carriers (with a record purchase in June of 200 

aircraft by Malaysian carrier AirAsia, totalling $18.2 billion), the 

coming updating of European and US fleets will keep the 

market active. The continued vitality of leasing companies may 

prove crucial for financing these operations. Boeing, for its part, 

is no doubt mindful of the successes of Airbus’s A320neo (with 

already more than 1,000 orders) and of the expanding 

competition in the market (e.g., the agreement between Comac 

in China and Bombardier in Canada, a herald of future 

collaborative operations between constructors). Boeing is 

expected to soon clarify its position on this very important 

segment. Will it re-engine its B737 or design its successor? _BG 

Civil aviation: major world aeronautics constructors and component manufacturers 



1 Airbus Commercial Netherlands 36.7 -0.1% 

2 Boeing Comm. Airplanes USA 31.8 -6.5% 

3 Bombardier Aerospace Canada 8.6 -8.5% 

4 Embraer Brazil 5.4 -2.0% 

5 Gulfstream (*) USA 3.9 -0.6% 

6 Dassault Aviation (**) France 3.2 32.2% 

7 Hawker Beechcraft USA 2.8 -12.3% 

8 Cessna USA 2.6 -22.4% 

9 ATR France/Italy 1.4 n/a 

New orders and cancellations, June 2011 

Airbus Boeing Bombardier 

Aerospace (*) 

Gross orders 777 230 267 

Cancellations 137 59 66 

Net orders 640 171 201 

Net orders,same period of previous year 117 177 11 

(*) 

12 months to end of 31 January 2011 

Source: constructors 

(*) 

estimates 

(**) 

Falcon range 

Sources: constructors, Euler Hermes 

13



Global risk 

B 

Chemicals 

In tune with the health of world trade 

Overview: back to a bull cycle 

Estimated at €2.1 trillion excluding pharmaceuticals, 

worldwide chemical sales recovered remarkably in 2010. This 

came on the heels of two dangerous years, in 2008 and even 

more in 2009, during which period they fell to €1.87 trillion. 

World chemical production rose 9.3% by volume between 2009 

and 2010, boosted in particular by output in Asia (+13%) and in 

the European Union (+10%). It benefited from massive 

restocking and from a dramatic revival in demand from 

operators in the chemical industry’s biggest markets, led for 

their part by the electronics and automotive sectors. Asia, 

North America and the EU together account for 85% of global 

chemical turnover, with China on its own accounting for 22% 

and now tailing Europe, at 24%. 

Current situation: a successful year 

The effects of the cyclical upturn in the sector at the end of 

2010, translated into excellent financial performances by the 

major world chemical operators, such as BASF, which doubled 

its profitability. The measures operators took in response to the 

crisis to boost productivity and refocus on activities in which 

they occupy key positions have helped in this. But some 

geographical markets, like some segments of the chemicals 

sector, are not doing so well as others. European petrochemical 

companies, for example, are forced to restructure in the face of 

price competition from their Middle Eastern counterparts. On 

the other side of the Atlantic, the industry is suffering from the 

poor state of its second biggest market, residential 

construction, which failed to revive last year. In the end, it is 

Asia and the EU that are benefiting more from the growth in the 

chemicals market: Asia – including, of course, China – through 

their necessary investments in infrastructure and in 

developing their industries, and the EU due to its strong 

positioning in exports, posting a 2010 sectoral trade surplus of 

€47 billion. The slight slowing of activity in the sector in Q4 2010 

proved only short-lived. The first quarter of 2011 brought a 

revival in chemical production, with the European industry, for 

example, posting a quarterly increase of 3.2% (after +1.5% in 

Q3). 

Outlook: 2011 looks good 

Even so, European chemical production has not caught up to 

its pre-crisis level. At its current rate, it will achieve this during 

2012. The European Chemical Industry Council (CEFIC) has 

revised its 2011 growth forecast for the European chemical 

sector upwards to 4.5% by volume, against an initial forecast of 

below 3%, boosting our forecast for world market growth to 7%. 

The impact of a potential upward drift in material input costs – 

in the first place, oil – would seem to weigh less than before on 

the margins of the major players in the sector. Acting on the 

lessons of the past crisis, they have become key players in 

certain fields, gaining positions where they can resist calls 

from their customers to cut prices. _ML 

Major world chemicals groups 



1 BASF Germany 85 20% 

2 Dow Chemical USA 54 20% 

3 Lyondellbasell (*) USA / Luxembourg 41 34% 

4 Sabic Saudi Arabia 41 47% 

6 Dupont de Nemours USA 32 21% 

7 Ineos (**) UK 31 22% 

8 Bayer Germany 24 15% 

9 Mitsubishi Chemical Japan 21 -11% 

10 Akzo Nobel Netherlands 19 7% 

(*) 

Basis not comparable (**) Estimates 


World chemical production, by region 

Zone 2010 2000 

European Union 24% 32% 

North America 21% 28% 

Asia (excl. Japan and China) 16% 13% 

Japan 6% 12% 

China 22% 6% 

Latin America 5% 4% 

Rest of world 6% 5% 

Source: Cefic Chemdata 

14



Global risk 

C 

Construction 

Dispersed and fragile growth 

Overview: strategic national markets 

Construction sector turnover worldwide fell by 3% to around 

$7.2 trillion in 2010. The main markets are the United States, 

China and Europe, the latter made up of different national 

markets that develop according to their own specific 

economic and social situations. The emerging countries’ 

share of the world market continues to grow and is nearing 

50% of the world total. Despite its exposure to the ups and 

downs of the economic environment, the sector over the 

decade continues growing by an annual average rate of 3%. A 

key determinant of economic growth, in the developed 

countries construction continues to play a significant role, 

accounting for around 10% of GDP. The sector employs a large 

number of persons in various capacities, and can be broken 

down into three main segments: residential construction, 

infrastructure, and the construction of buildings for 

agriculture, industry, commerce and the public sector. 

Current situation: geographically uneven recovery 

Different construction markets were affected by the crisis to 

very differing degrees. But, and despite efforts at systematic 

support, they did not all revive with the stimulus measures 

taken. While construction markets show signs of recovery in 

many countries, their revival in the developed countries 

remains modest. The US market is still struggling with stocks 

of 3 million unsold homes, with Spain similarly struggling 

with 650,000 homes on the market. Other countries, for 

varying reasons, show different indices of construction output 

growth, which can be still modest, as in France, Germany and 

the UK. Better growth remains the preserve of the emerging 

countries, a response to increasing urbanisation and/or to 

significantly faster growth in public works, as in China, Brazil 

and India. 

Outlook: growth full of pitfalls 

The construction sector will continue improving, with 

turnover rising by 2.5% in 2011. Emerging countries will see the 

best growth. In the medium term, the current leaders could be 

joined by other countries, such as those in Eastern Europe, for 

instance Poland. Turkey could also see construction activity 

take off. Japan will be a special case because of its 

reconstruction efforts. In most developed countries, the 

difficulty will be in transitioning out of previous support 

schemes and coping with the austerity plans aimed at 

shedding public debt. Construction markets remain 

dependent on many factors. Higher interest rates could in 

particular impact on their recovery. For the companies, 

international groups and small/individually-owed businesses 

that all make up the construction sector, the price pressures 

remain sharp, especially given continued strong competition 

on the international level, and also at the national level 

between businesses of unequal size. _DM 

Major world building and civil engineering companies 



1 China Railway Const. Corp China 68 31% 

2 China Railway Group Ltd China 68 37% 

3 Vinci France 45 0% 

4 China Communications Const. China 41 21% 

5 Bouygues Immobilier France 31 -7% 

6 China Metallurgical Group China 31 25% 

7 Hochtief Germany 28 -10% 

8 Bechtel USA 28 -9% 

9 Groupo ACS Spain 21 -5% 

10 Strabag Austria 16 -6% 

Sources: companies, Euler Hermes 

Construction market 

2010 Change 


China 942 8% 

Japan 843 8% 

USA 819 -12% 

Germany 331 -3% 

France 215 -3% 

Spain 196 -13% 

United Kingdom 186 11% 

Sources: European Construction Industry Federation (FIEC), Euler Hermes 

15



Global risk 

A Energy 

Oil up, nuclear power down 

Overview: rising oil prices and energy consumption, declining 

nuclear fortunes 

A rapid rise in oil and gasoline prices has slowed the global 

economy, hitting US GDP growth and reversing what had 

been an improving employment situation. The accident at 

the Fukushima nuclear plant in Japan has probably slowed 

growth in the global nuclear industry outside of China for 

years. Growth in energy consumption has been and will likely 

continue to be from non-OECD countries, particularly China. 

Current situation: the Arab Spring has driven up oil prices 

So far, 2011 has proven to be much more eventful than would 

have been expected. The Arab Spring resulted in a rise in oil 

prices of 35% between February and April. The accompanying 

rapid rise in gasoline prices has taken a heavy toll on the stillfragile 

OECD economies. Now gasoline prices have risen another 

17% in the second quarter. Global GDP was damaged 

again by approximately 0.2% in March, when a nuclear power 

plant in Fukushima, Japan was hit by a combination of one of 

the largest earthquakes ever and a huge tsunami, resulting in 

severe damage which has started a new round of debate over 

the desirability of nuclear energy. The earthquake and tsunami 

also caused serious supply line disruptions in Japan, 

which in turn have hurt the global auto and electronics 

industries. 

Outlook: energy consumption outside of the OECD will continue to 

rise, but the Japanese accident will shake the nuclear industry 

The disaster at the nuclear plant in Fukushima has re-ignited 

the debate over nuclear power. German Chancellor Merkel, 

who had been a strong pro-nuclear advocate, shut down 

older reactors and prompted a review which appears likely to 

phase out all nuclear power in Germany by 2022. France, 

which gets 75% of its electricity from nuclear reactors, has reiterated 

its long-standing commitment to nuclear power. In 

the US, no new nuclear plants have been built in over 30 

years, and interest in building another one will face enormous 

opposition. The Japanese stance on the nuclear industry 

is mixed, as utilities have pledged their commitment, 

while the government has flip-flopped on the issue. On net, 

the global nuclear industry is likely to suffer for years from 

the incident, leading, in some countries, to greater efforts in 

developing alternative energy sources. However the nuclear 

industry will continue to thrive in China, which currently has 

27 plants under construction and many more in the wings. 

Overall energy consumption and production grew by over 5% 

in 2010, but much of the growth was concentrated in the non- 

OECD nations, a situation that is likely to continue in coming 

years._DN 

Major world energy companies 



1 Saudi Aramco Saudi Arabia not published na 

2 N.I.O.C. Iran not published na 

3 RD Shell Netherlands/UK 392 41% 

4 Exxon Mobil USA 383 27% 

5 BP UK 297 24% 

6 Sinopec China 286 44% 

7 Petrochina/CNPC China 222 49% 

8 Chevron USA 199 18% 

9 ConocoPhillips USA 199 31% 

10 Total France 188 17% 


Growth in petroleum demand to 2015, by major region 

Millions of barrels/day 2010 2015 2020 Change 

2020/2015 

Total OECD 45.7 46.5 46.0 -1.0% 

of which. North America 23.7 25.2 25.3 0.6% 

of which Europe 14.3 13.6 13.0 -3.8% 

of which. Asia 7.8 7.8 7.7 -1.3% 

Total non-OECD 40.3 43.9 46.9 6.9% 

of which. China 9.0 11.1 12.6 13.5% 

of which. India 3.3 3.7 4.1 12.2% 

of which. Middle East 6.9 7.5 8.1 7.8% 

of which. South America 6.1 6.2 6.3 1.3% 

Other non-OECD 15.0 15.4 15.8 2.6% 

World 86.0 90.4 92.9 2.8% 

Source: US Energy Information Administration 

16



Global risk 

C 

Air transport 

Still under pressure 

Overview: back to 2008 

In 2010, according to the International Air Transport 

Association (IATA), the world air transport industry nearly 

made up the ground lost in the crisis, with turnover of $554 

billion and even a consoldiated profit of $18 billion, the sector’s 

best result for 10 years. Asia Pacific stood out with overall 

profitability 2.5 times greater than North America’s and 5 times 

greater than Europe’s. 

Current situation: oil price inflation 

IATA’s recent downward revisions of its 2011 profit forecast (to 

$4 billion, coming 50% from Asia, 30% from North America and 

15% from Europe) take in the impact of unsettling events 

(political unrest in North Africa and the Middle East, 

earthquake in Japan) and, moreover, the impact of the marked 

rise in oil prices earlier this year. Under present price 

conditions, the fuel bill is likely to account for up to nearly 30% 

of carriers’ operating costs. The regular use of fuel surcharges 

aimed at offsetting this increase hampers growth in world air 

traffic, but the latter continues to be fed by world growth and by 

strong world trade (expected to grow by an annual rate of 4%). 

The vast majority of western carriers continue to exercise strict 

control over their offerings (measured expansion of capacity 

on some long-haul routes and capacity restrictions/reductions 

in domestic markets) in order to maintain high occupancy 

rates and preserve a profitable price threshold. Their 

counterparts in Asia, the Middle East and South America are 

engaged in more proactive growth. 

Outlook: relentless quest for better profitability 

As airlines look to consolidate their recovery, new fields of 

action seem to be coming onto the agenda: cutting distribution 

costs and reclaiming their direct relationships with customers 

(and with travel agencies), in order to emulate their low-cost 

competitors via a range of additional services (access to travel 

lounges, etc.), and these are generating significant additional 

resources ($22 billion for the industry in 2010, according to the 

Amadeus IT Group). Carriers are also examining ways – and 

many of them seizing opportunities – to optimise their fleets by 

buying more fuel-efficient aircraft (with engine manufacturers 

promising double-digit reductions in fuel consumption) and 

withdrawing older models of aircraft. Despite carrier balance 

sheets being quite degraded by a decade of crisis in some 

regions, fleet renewal comes hand-in-hand with significant 

reductions in operating and maintenance costs, and chimes 

well with the need to align the sector’s productive apparatus 

with the constraints imposed by now durably costly energy. 

Lastly, strategic adjustments will carry on, as shown by 

Singapore Airlines’ decision to form a low-cost subsidiary to 

serve medium and long-haul routes._BG 

(*) 

International Air Transport Association 

Major world airline companies 



1 Lufthansa Germany 36.3 17.1% 

2 United Continental USA 33.9 (*) 18.9% 

Holdings 

3 Delta Airlines USA 31.8 13.2% 

4 Air France-KLM France 31.4 (1) 7.6% 

5 American Airlines USA 22.2 11.3% 

6 IAG (British Airways UK / Spain 19.6 (**) 5.1% 

+ Iberia) 

7 Japan Airlines Japan n/a (***) n/a 

8 All Nippon Airways Japan 15.5 (1) 17.8% 

9 Southwest + AirTran USA 14.7 (****) 16.0% 

10 Emirates UAE 14.7 25.0% 

11 Qantas Australia 12.7 (2) 10.2% 

(1) 

as of 31 March 2011 (2) (*) 

as of 30 june 2010 1 euro = 1.34 USD Turnover proforma 

(**) 

Combined Results 

(***) 

Figures not available 

(****) 

Cumulative turnover 


Rate of growth in annual air trafic 

Passengers and cargo. in %) 2009 2010 2011 (F) 

Global -4.3 10.3 4.7 

North America -6.3 9.9 4.0 

Europe -7.7 5.0 3.9 

Asia Pacific -2.2 12.6 6.4 

Middle East 9.5 20.0 14.6 

Latin America 0.0 14.5 6.0 

Africa -5.4 15.0 6.5 

Source: IATA 

17



Global risk 

Information and communications technology 

B 

Forced to innovate 

Overview: catching up with long-term trends 

The world information and communications technology (ICT) 

market (comprising IT and telecoms equipment and services) 

posted turnover in excess of $2.9 trillion in 2010, an increase of 

around 2%, indicative of the sector’s gradual emergence from 

the crisis. Part of this growth is simply a catching up, 

particularly in investment and equipment, with activity in the 

services segment having been better protected during the 

crisis. Equipment, however, accounted for no more than 25% of 

the market. By region, North America and Europe, each 

represent 30% of the market, while Asia Pacific accounts for 27% 

and boasts a far higher growth rate. A special feature of the 

sector is its stunning capacity for innovation in new 

technologies, some of which do not achieve their hoped-for 

success, such as WiMAX (Worldwide Interoperability for 

Microwave Access) or mobile television. 

Current situation: windfall for investment 

To help it to emerge from the crisis, the sector benefited from 

special assistance received under stimulus plans. The revival in 

its activity is still very gradual considering the importance of 

this sector in employing a large number of people and 

contributing to economic growth and productivity. The weak 

growth in the sector, at a time when economies are reviving, 

suggests that its driving role in the economy diminishes as 

nations develop. The sector suffers from the high ownership 

levels now achieved in America, Europe and emerging 

countries, irrespective of the differences between them. New 

investment acts a windfall for an industry in need of new 

sources of revenues, helping it to introduce new technologies 

and pursue better growth than enjoyed by the economy at 

large. 

Outlook: upturn sustained by new growth markets 

Recovery in the ICT sector will continue worldwide in 2011, with 

likely growth of 3.5%, and growth at possibly twice that figure in 

some markets. Once more, growth in the sector will be driven 

primarily by the emerging markets. Also fuelling market 

growth will be the roll-out of new growth activities: for 

example, with Long Term Evolution (LTE) technology in 

network infrastructure in response to the growing data traffic 

needs of mobile internet access, the still ongoing process of 

server virtualisation, and new mobile phone applications. 

Services will continue to benefit from the strategy of 

outsourcing these activities, with a confirmed contribution 

from cloud computing. However, the catch-up in IT equipment 

investment could later give way to a stabilisation in that 

segment._DM 

Major companies 



1 HP USA 126 11% 

2 A&T USA 124 1% 

3 NTT Japan 120 9% 

4 Verizon USA 107 -1% 

5 IBM USA 100 4% 

6 Toshiba Japan 75 9% 

7 Microsoft USA 62 7% 

8 Nokia Finland 57 -1% 

9 Cisco USA 40 11% 

10 Ericsson Sweden 28 4% 


The ICT market 

USD billions 2010 Change 2011 (f) Change 

North America 890 2,6% 910 2.3% 

Europe 914 0,3% 932 2.0% 

Asia Pacific 758 3,6% 796 5.0% 

Rest of world 362 7,9% 387 7.0% 

Total 2,923 2,8% 3,025 3.5% 

Sources : IDATE, Euler Hermes forecasts 

18



Contributions 

This issue was prepared with the collaboration of the following entities within the Euler Hermes group. 

Country Entity Contributor 

USA Euler Hermes ACI Inc Kevin Mac Cann Dan North 

Canada Euler Hermes ACI Inc Yutaka Tanaka 

Japan Euler Hermes Kreditversicherungs-AG Yoichi Umezawa 

Germany Euler Hermes Kreditversicherungs-AG Thomas Krings Romeo Grill 

France Euler Hermes SFAC SA Yves Lidome 

UK Euler Hermes UK plc Mark Wyatt 

Italy Euler Hermes SIAC Massimo Reale 

Spain Euler Hermes Crédito Sucursal en Espana de Euler Hermes SFAC, S.A. Jochen Wilmes 

Netherlands Euler Hermes Kredietverzekering NV Walter Toemen 

Belgium Euler Hermes Credit Insurance Belgium SA Marc Petre 

Poland Euler Hermes Towarzystwo Ubezpieczen SA Tomasz Starus 

Czech Republic Euler Hermes Cescob, uverova pojistovna, a.s. Miroslav Ingeduld 

Romania Euler Hermes Servicii Financiare S.R.L. Carmen Sorina Eremia 

Slovakia Euler Hermes Servis, s.r.o. Juraj Janci 

Sweden Euler Hermes Kreditförsäkring Norden AB Kirsten Neergaard 

Brazil Euler Hermes Seguros de Credito SA Marcelo Oliveira 

Mexico Euler Hermes Seguro de Crédito SA Adolpho Loredo 

Asia Euler Hermes Kreditversicherungs-AG Hong Kong Branch Anne Simpson 

China Euler Hermes Information Consulting (Shanghai) Co Ltd Cherry Xie 

Russia Euler Hermes Kreditversicherungs-AG Representative Office Nicky Andreas Steinle 

19



Summary 

of economic forecasts 

GDP, inflation (change over the period in %),unemployment rate (in % of labour force) 

Sources: IHS Global Insight, Euler Hermes forecasts from Economic Outlook no. 05 2011 

forecasts 

Country 2009 2010 2011 2012 

United States GDP -2.6 2.9 2.4 2.6 

Inflation -0.1 1.5 3.1 1.8 

Unemployment rate 9.3 9.6 8.9 8.5 

General government balance (% of GDP) -10.4 -8.7 -9.9 -8.4 

Public debt (% of GDP) 87.2 95.7 102.2 106.1 

Current account (% of GDP) -2.7 -3.2 -3.4 -3.3 

Canada GDP -2.8 3.2 2.8 2.4 

Inflation 0.3 1.7 3.1 2.0 





Japan GDP -6.3 4.0 -1.0 2.7 

Inflation -1.5 -0.6 0.3 0.2 




Current account (% of GDP) 2.8 3.6 2.2 2.6 

Eurozone GDP -4.1 1.7 1.9 1.6 

Inflation 0.3 1.6 2.6 1.8 





Germany GDP -4.7 3.5 3.2 1.9 

Inflation 0.3 1.3 2.3 1.9 





France GDP -2.6 1.4 1.8 1.7 

Inflation 0.1 1.5 2.0 1.6 





Italy GDP -5.2 1.2 0.9 1.0 

Inflation 0.7 1.6 2.7 1.9 





Spain GDP -3.7 -0.1 0.7 1.0 

Inflation -0.2 2.0 2.9 2.0 





Netherlands GDP -3.9 1.8 2.0 1.6 

Inflation 1.0 1.0 2.2 1.7 





Belgium GDP -2.7 2.1 2.3 1.9 

Inflation 0.0 2.3 3.2 2.2 





20



GDP, inflation (change over the period in %),unemployment rate (in % of labour force) 

Sources: IHS Global Insight, Euler Hermes forecasts from Economic Outlook no. 05 2011 

forecasts 

Country 2009 2010 2011 2012 

Austria GDP -3.4 2.1 3.0 2.1 

Inflation 0.5 1.8 3.1 1.9 


General government rate (% of GDP) -4.1 -4.6 -3.3 -2.8 

Public debt (% of GDP) 67 70 71 72 


Finland GDP -8.3 3.2 3.5 2.3 

Inflation -0.2 1.4 3.1 2.0 





Greece GDP -2.3 -4.4 -3.6 0.1 

Inflation 1.3 4.7 3.4 1.0 





Ireland GDP -7.6 -1.0 0.1 1.4 

Inflation -1.7 -1.6 1.0 0.5 




Current account (% of GDP) -3.0 -0.7 1.1 1.7 

Portugal GDP -2.5 1.3 -2.1 -0.5 

Inflation -0.9 1.4 3.1 1.5 





United Kingdom GDP -4.9 1.3 1.4 1.8 

Inflation 2.2 3.3 4.0 2.6 





Sweden GDP -5.3 5.4 4.4 2.5 

Inflation -0.3 1.5 2.9 2.2 


General government rate (% of GDP) -0.7 0.0 0.4 0.7 



Denmark GDP -5.2 2.1 1.2 1.7 

Inflation 1.3 2.3 2.6 1.6 





Norway GDP -1.6 0.3 2.4 2.5 

Inflation 2.0 2.4 1.7 2.1 


General government rate (% of GDP) 10.7 10.6 12.3 12.5 



Switzerland GDP -1.9 2.6 2.2 1.9 

Inflation -0.5 0.7 0.9 0.9 


General government rate (% of GDP) 1.2 0.5 0.6 0.7 



21



Registered office: Euler Hermes — 1, rue Euler —75008 Paris — France 

Tel.: + 33 (0) 1 40 70 50 50 — Fax: + 33 (0) 1 40 70 50 17 — www.eulerhermes.fr 

> Argentina 

Euler Hermes Argentina SA 

Av. Corrientes 299 - 2° Piso 

C1043AAC CABA Buenos Aires 

Tel.: +54 11 4320 7157/77 

> Australia 

Euler Hermes Trade Credit 

Underwriting Agents Pty Ltd. 

Level 9, Forecourt Building 

2 Market Street 

Sydney, NSW 2000 

Tel.: + 612 8258 5108 

> Austria 

Prisma Kreditversicherungs-AG 

Himmelpfortgasse 29 

1010 Vienna 

Tel.: + 43(0) 5 01 02-0 

> Bahrain 

See United Arab Emirates 

> Belgium 

Euler Hermes Credit Insurance Belgium S.A. (N.V.) 

Rue Montoyer, 15 

1 000 Brussels 

Tel.: + 32 2 289 3111 

> Brazil 

Euler Hermes Seguros de Crédito SA 

Avenida paulista, 2,421 - 3°andar 

Jardim Paulista 

Sao Paulo /SP 01311-300 

Tel.: + 55 11 3065 2260 

> Canada 

Euler Hermes Canada 

1155 René-Lévesque West 

Blvd., Suite 1702 

Montréal Québec H3B 3Z7 

Tel.: + 1 514 876 9656 

> Chile 

Euler Hermes Seguros de Crédito SA 

Avda Kennedy 5735.Of.801, Torre Poniente 

Las Condes, Santiago 

Chile 

Tel.: + 56 2 246 1793/86 

> China 

Euler Hermes Information Consulting (Shanghai) Co., 

Ltd. in Shangai, PRC 

Unit F, 9th Floor 

Mirea Asset Tower 

166 Lujiazui Ring Road, Pudong 

Shangai, 200120 

Tel.: + 81 21 5 012 2220 

> Colombia 

Euler Hermes Colombia 

Calle 72 6-44 Piso 3 

Edificio APA 

Bogota 

Tel.: + 57 1 326 4640 

> Czech Republic 

Euler Hermes Cescob uverova pojistovna, A.S. 

Molákova 576/11 

186 00 Prague 8 

Tel.: + 420 266 109 511 

> Denmark 

Euler Hermes Kreditforsikring 

Amerika Plads 19 

2100 Copenhagen O 

Tel.: + 45 88 33 3388 

> Estonia 

Contact Finland 

> Finland 

Euler Hermes Luottovakuutus 

IMannerheimintie 105 

00280 Helsinki 

Tel.: + 358 10 8 50 8500 

> France 

Euler Hermes SFAC 

1, rue Euler 

75008 Paris 

Tel.: + 33 1 40 70 50 50 

Euler Hermes World Agency 

8, rue Euler 

75008 Paris 

Tel.: + 33 1 40 70 50 83 

Euler Hermes Collections 

59, avenue Marceau 

75008 Paris 

Tel.: + 33 1 40 70 15 55 

> Germany 

Euler Hermes Kreditversicherungs-AG 

Friedensallee 254 

22763 Hamburg 

Tel.: + 49 40 8834 0 

Federal Export Credit Guarantees 

Friedensallee 254 

22763 Hamburg 

Tel.: + 49 40 8834 9192 

Euler Hermes Collections GmbH 

Zeppelinstr. 48 

14471 Postdam 

Tel.: + 49 331 27890-000 

> Greece 

Euler Hermes Emporiki SA 

116 Laodikias Street & 1-3 Nymfeou Street 

115 28 Athens 

Tel.: + 30 210 69 00 000 

> Hong Kong 

Euler Hermes Credit Underwriters (HK) Ltd. 

Suites 403-11, 4/F 

Cityplaza 4 

12 Taikoo Wan Road 

Island East 

Hong-Kong 

Tel.: + 852 2867 0061 

> Hungary 

Euler HermesMagyar Hitelbiztosito Zrt. 

Kiscelli u. 104 

1037 Budapest 

Tel.: + 36 1 453 9000 

> India 

Euler Hermes Services India Pvt. Ltd. 

4th Floor, Voltas House 

23, J N Heredia Marg 

Ballard Estate 

Mumbai 400 001 

Tel.: + 91 22 6623 2525 

> Indonesia 

PT Assuransi Allianz Utama Indonesia 

Summitmas II. Building, 9 th floor 

JI. Jenderal Sudirman Kav 61-62 

Jakarta 12190 

Tel.: + 62 21 252 2470 ext 6100 

> Ireland 

Euler Hermes Ireland 

The Arch 

Blackrock Business Park 

Carysfort Avenue 

Blackrock Co Dublin 

Tel.: +353 1 200 0400 

> Israel 

ICIC, 

2, Shenkar street 

68010 Tel Aviv 

Tel: + 97 23 796 2444 

> Italy 

Euler Hermes SIAC S.p.A. 

Via Raffaello Matarazzo, 19 

00139 Rome 

Tel.: + 39 06 87001 

> Japan 

Euler Hermes Kreditversicherungs-AG 

Japan Branch Office 

Kyobashi Nisshoku Bldg. 7F 

8-7 Kyobashi, 1-chome, 

Chuo-Ku 

Tokyo 104 0031 

Tel.: + 81 3 3538 5403 

> Kuwait 


> Latvia 

Contact Poland 

> Lithuania 

Contact Poland 

> Mexico 

Euler Hermes Seguro de Crédito S.A. 

Blvd. Manuel Avila Camacho 

#164, 8° piso 

Col. Lomas de Barrilaco 

Deleg. Miguel Hidalgo 

Mexico DF CP 11010 

Tel.: + 52 55 5201 7900 

> Morocco 

Euler Hermes Acmar 

37, bd Abdelattif Ben Kaddour 

20100 Casablanca 

Tel.: + 212 5 2279 0330 

> Netherlands 

Euler Hermes Kredietverzekering NV 

NV Interpolis Kredietverzekeringen 

•Pettelaarpark 20 

5216 PD’s-Hertogenbosch 

Tel.: + 31 73 688 9999 

> New Zealand 

Euler Hermes Trade Credit Limited 

Level 1, 152 Fanshawe Street 

Auckland 1010 

Tel.: + 649 354 2990/5 

> Norway 

Euler Hermes Kredittforsikring 

Holbergsgate 21 

P.O. Box 6875 St. Olavs Plass 

0130 Oslo 

Tel.: + 47 23 25 60 00 

> Oman 


22



Registered office: Euler Hermes — 1, rue Euler —75008 Paris — France 

Tel.: + 33 (0) 1 40 70 50 50 — Fax: + 33 (0) 1 40 70 50 17 — www.eulerhermes.fr 

> Philippines 

See Singapore 

> Poland 

Euler Hermes Towarzystwo 

Ubezpieczen S.A. 

ul. Domaniewska 50 B 

02-672 Warsaw 

Tel.: + 48 22 363 6363 

> Portugal 

COSEC - Companhia de Seguro de Créditos, S.A. 

Av. da República, nº 58 

1069-057 Lisbon 

Tel.: + 351 21 791 3700 

> Qatar 


> Romania 

Euler Hermes Servicii Financiare S.R.L. 

Str. Petru Maior, nr.6, 

Sektor 1 

011264, Bucarest 

Tel.: + 40 21 302 03 00 

> Russia 

Euler Hermes Credit Management 

Krymskiy Val, 3/2 

Moscow, 119 049 

Tel.: + 7 495 649 80 08 

> Saudi Arabia 


> Singapore 

Euler Hermes Kreditversicherungs-AG, 

Singapore branch 

3 Temasek Avenue 

# 03-02 Centennial Tower 

Singapore 039190 

Tel.: + 65 6297 8802 

> Slovakia 

Euler Hermes Servis, s.r.o. 

Plynárenská 1 

82109 Bratislava 

Tel.: + 421 2 582 80 911 

> South Korea 


Credit Underwriters (HK) Ltd. 

Korea Liaison Office 

Room 1411, 14th Floor, Sayong 

Platinum Building 

156, Cheokseon-dong 

Chongro-ku 

Seoul 110 052 

Tel.: + 82 2 733 8813 

> Spain 

Euler Hermes Crédito, Sucursal en Espan de Euler 

Hermes SFAC-SA 

Paseo de la Castellana, 95 

Planta 14 

Edificio Torre Europa 

28046 Madrid 

Tel.: + 34 91 417 77 67 

> Sweden 

Euler Hermes Kreditförsäkring Norden AB 

KlaraBergsviadukten 90 

P.O. Box 729 

101 64 Stockholm 

Tel.: + 46 8 555 13 600 

> Switzerland 

Euler Hermes Kreditversicherungs-AG, 

Euler Hermes Reinsurance 

Tödistrasse 65 

8002 Zürich 

Tel.: + 41 44 283 6 5 65 (Kreditversicherung) 

Tel.: + 41 44 283 6 5 85 (Reinsurance) 

>Taiwan 

See Hong Kong 

>Thailand 

Allianz C.P. General Insurance co, Ltd 

323 United Center Building 

30th Floor 

Silom road 

Bangrack, Bangkok 10500 

Tel.: + 66 2638 9000 

>Tunisia 

See Italy 

>Turkey 


Risk Yonetimi ve Danismanlik 

Hizmetleri Limited Sirketi 

Iz Plaza Giz, Ayazaga Yolu 

No.9, Kat 14 Maslak 

34398 Istanbul 

Tel.: + 90 212 290 76 10 

> United Arab Emirates 


c/o Alliance Insurance Co. (PSC) 

Warba Center, 4th Floor 

Office 405 

PO Box 183957 

Dubai 

Tel.: + 971 4 2116005 

> United Kingdom 

Euler Hermes UK plc 

1 Canada Square 

Londres E14 5DX 

Tel.: + 44 20 751 29333 

Euler Hermes Guarantee plc 

Surety House 

Lyons Crescent 

Tonbridge, Kent TN9 1EN 

Tel.: + 44 17 327 703 11 

> United States 

Euler Hermes ACI inc. 

800 Red Brook Boulevard 

Owings Mills, MD 21117 

Tel.: + 1410 753 0753 

Euler Hermes UMA inc. 

(trade debt collections) 

600 South 7th Street 

Louisville, KY 40201-1672 

Tel.: + 1 800-237-9386 

> Vietnam 

See Singapore 

23

www.eulerhermes.us 

Euler Hermes Economic Outlook Global sectors review is published 

twice a year by the Market Management, Strategic and Economic 

Studies Department of Euler Hermes 

800 Red Brook Blvd., Owings Mills, MD 21117 – Tel.: 877-883-3224 

This document reflects the opinion of the Market Management, Strategic and 

Economic Studies Department of Euler Hermes. 

The information, analyses and forecasts contained herein are based on the 

Department's current hypotheses and viewpoints and are of a prospective nature. In 

this regard, the Market Management, Strategic and Economic Studies Department of 

Euler Hermes has no responsibility for the consequences hereof and no liability. 

Moreover, these analyses are subject to modification at any time.

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