Coface risk assessment update
Coface has held its 16th Country Risk Conference with the focus being on the current crisis in the Euro zone.
Coface’s predictions are that Europe in 2012 will be marked by a recession rate of -0.1 percent, while growth will stabilise in the USA at +1.6 percent and recover in Japan at +1.8 percent. Emerging European economies are most at risk, particularly those in Eastern Europe who are heavily reliant on European banks, as it is estimated that in the last 10 years, one fifth of the growth of Eastern European economies can be attributed to trans-frontier credit.
Italy and Spain’s assessments have been downgraded to A4, affecting in turn Croatia, which is exposed to Italian risk, which has in turn been downgraded to B. The Czech Republic, Slovenia and Slovakia have been placed under negative watch, with Hungary also being downgraded to B.
The political landscape in North Africa and the Middle East has affected those emerging economies’ assessments also, with Egypt being downgraded to C, Syria to D and the positive watch being removed from Nigeria’s D rating owing to ‘problematic governance’.
President of Coface, François David said, “With no rapid response from institutions to the crisis, negative forecasts on financial markets have prompted the distrust of actors of the real economy. However, it will be the corporates that will feel the repercussions of this crisis despite that fact that they have never been managed so well. In 2012, the combination of significantly weaker growth in Europe with the drying up of credit facilities could significantly affect the companies’ credit risk.”