Coface Country Risk Conference highlights risks of continued austerity in Europe
Economists at Coface, the global experts in assessing country risk for businesses trading in domestic and export markets, are downgrading their GDP growth forecast for the Eurozone. The announcement at Coface’s Country Risk Conference in London on Thursday 13 June reflects concerns about Germany, the largest EU economy and is in contrast with a more positive outlook for the USA and Japan.
Revealing Coface's new growth predictions, the company’s Chief Economist, Yves Zlotowski, said: "We do not believe there will be a recession in Germany but German exports are being hampered by the recessions in the core Eurozone countries of France, Italy and Spain which have severely curbed domestic demand. This has prompted us to downgrade our forecast for Germany to just 0.3% in 2013, and we are further downgrading the Eurozone as a whole to -0.6% retraction as austerity continues to bite and the risk of payment defaults increases.
"We are also downgrading our 2013 forecasts for the BRIC economies where the failure to address questions over governance (India and Russia), infrastructure (Brazil) and the availability of credit (China) have turned these long-term concerns into short-term priorities.
"However, we are more optimistic about the prospects for the US although growth in the private sector is tempered by the squeeze on net public spending. We also believe the economic policies of new Japanese Prime Minister, Shinzo Abe, are having a positive impact and expect growth of 1.4% in 2013."
Grant Williams, Risk Underwriting Director at Coface in the UK & Ireland, gave a mixed forecast for the UK: "Coface’s growth prediction for 2013 is now 0.6%, following better-than-expected figures in the first quarter. Consumer confidence and spending is improving, as reflected by the 11% increase in new car registrations in May compared with the same month in 2012. But while this shows we are 'trading-up' it has been more difficult to ‘trade out’ because our European export markets are so sluggish. In addition, despite the Funding For Lending scheme giving a boost to the mortgage market, Coface has continued concerns about the availability of business credit, an essential pre-cursor for long-term investment and recovery."
Coface's biennial Country Risk Conference hosted by Frédéric Bourgeois, Managing Director of Coface in the UK and Ireland, was held at the British Library, London, and attracted over 150 delegates from the trade credit industry.
In addition to Coface’s Chief Economist, Yves Zlotowski, other speakers at the conference and their conclusions were:
- David Smith, Economics Editor, The Sunday Times, who was cautiously optimistic about the prospects for the UK economy.
- Dr Robin Niblett, Director, Chatham House, who predicted that the US economy will turn the corner in 2013.
- Bruno Weymuller, Former head of strategy at an oil major, who forecast that the world’s demand for energy will increase by 35% in next 25 years.
- Rain Newton-Smith, Head of emerging Markets, Oxford Economics, who commented that growth in emerging markets could stall due to rising wages and structural hurdles in India, Brazil and Russia.