201503 CM March

FEATURE
SPECIAL
GLOBAL ECONOMY
• RISK CONFERENCE •
WORLD IN ACTION
Sean Feast reports from the Coface 2015 Country Risk Conference in Paris.
THE global economy is on the path
to recovery, but it will be a gradual
process with clear winners and
losers.
After growth of 2.8 percent in 2014,
economists at the credit insurers Coface
are predicting further growth of 3.1 percent
in 2015, with moderate improvements in
both the advanced and emerging nations.
But the recovery will be fragile,
especially in Europe, and certain territories
including Russia and China are giving
cause for concern, as is the changing
political landscape.
Speaking at the Coface 2015 Country
Risk Conference, Yves Zlotowski,
Coface Chief Economist, said that after
the sovereign crisis, Europe has now
discovered what he describes as an
opposite risk, that of conserving heavy
debt that considerably affects the recovery
and feeds deflationary pressures: “Growth
is also hindered by geopolitical events with
uncertain outcomes,” he said, “primarily
the Russia-Ukraine geopolitical crisis
which affects the morale of players in the
economy.”
He said also that the return of
political risk in Europe itself is impacting
confidence: “In this regard, the elections
that punctuate 2015 will be important
tests,” he added.
Notwithstanding the challenges, Coface
predicts slow but perceptible growth in
Europe (c1.2 percent compared to 0.8
percent in 2014) and it has upgraded
its assessment of Spain, Germany and
Austria. Perhaps more strikingly, it has
also upgraded its assessment of Portugal
which it believes is emerging from its
rescue plan. The financial situation of
companies is gradually improving, margins
recovering and insolvencies are down.
In France and Italy too, Coface says
that conditions for growth are improving
and margins improving, but companies
are cautious about investing and
certain sectors – notably construction
– are under intense pressure: “There
is a big construction crisis in France,”
Yves continues. “Nearly a third of all
insolvencies are construction related,
and although new businesses are being
created, they are fragile and many will not
survive.”
While growth remains strong overall,
emerging countries are suffering from a
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