The 2012/01/19 at 07:00
Pélagie Harbour (vidéos) and Alexandre T. Analis (text)
While the growth forecasts of the credit insurer Coface for developed countries in 2012 are fairly optimistic (+1.1%), this growth is nevertheless to be spread unevenly between these countries. True, American growth is expected to stabilise (+1.6%) while that of Japan is to bounce back (+ 1.8%) after the Fukushima catastrophe. On the other hand, the European economy may enter a slight recession (- 0.1%). The downgrading of the ratings of a number of countries by Standard & Poor’s, Moody’s and Fitch Ratings, uncertainty about Greece’s capacity to reimburse international loans, a possibility of contagion to other countries in Southern Europe and Ireland… the misadventures of the Eurozone are not set to conclude this year.
In 2011, Coface registered a 19% progression of payment incidents worldwide, with a particularly enhanced rise (+28%) for Eurozone businesses. This degradation of the average solidity of businesses proves that the crisis is taking a new turn and has reached a global systemic dimension, with the penetration of the crisis in Italy. The situation has taken on a different visage since the 2008 shock due to this critical-size effect, but also due to increased financial entanglement and the exposure of banks inside and outside the Union to European sovereign debts. Italy and Spain, in Coface’s opinion, stand to undergo a decline in their activity this year; last year, payment incidents in Italian and Spanish companies increased by 50%.
Emerging Europe is expected to suffer even more from the drop in demand and financing flow in the Eurozone. Due to their exposure to Eurozone sovereign debts, Western European banks will be obliged to reduce support for their subsidiaries, with an impact on the granting of loans to companies. Yet these bank loans represent 70% of the GDP of Eastern Europe. A dwindling of European credit would have a major impact on activity in emerging Europe, with these economies also often being characterised by a private sector weighed down by foreign currency debts. In the East, the Czech Republic, Slovakia, Hungary, Slovenia and Hungary are predicted to be the most affected. The most worrying case remains that of Greece, where certain company heads nevertheless refuse to give in to the ambient pessimism:
Nicolas A. Vernicos, President of Vernicos Maritime Group and President of the International Chamber of Commerce (ICC) Greece
Until 2020, it will be necessary to count on emerging (or emerged, according to certain analysts) countries to pull up global growth. While China remains the most promising country at the moment, Brazil, India and Russia see their GDPs converging with that of Japan. This growth, reaching double figures in certain countries, is primarily pushed up by a soar in consumption via the development of middle classes, namely in sectors such as automobiles and financial services. Indonesia has all the assets needed for becoming an emerging power in the next few years:
Rajiv Biswas, Senior Director and Asia-Pacific Chief Economist at IHS Global Insight
The demographic situation, extremely variable between countries such as Russia and India for example, will remain at the heart of the economic evolutions of emerging countries. While the latter benefit from strong growth forecasts, 2011, marked by the Arab revolutions, will have shown that non-negligible political risks subsist. Political instability, uncertainty about the governance capacities of the new teams in power, and even a rise in criminality, are causing foreign investors to stall. In the Near and Middle East, Turkey is a model: the country is envied for its growth of nearly 10 %, the political base of the AKP party of the Prime Minister Recep Tayyip Erdogan, and its demographic dynamism. To such an extent that the issue of the country’s entrance in the European Union has now been relegated to the background.
Arab revolutions have not left the Sub-Saharan populations indifferent. Political change is nevertheless not on the agenda for most of the countries on the continent (re-election of Paul Biya in Cameroon, the new candidature of Abdoulaye Wade in Senegal…), and the return of political threats in Nigeria, Africa’s most populated country, has necessarily grabbed the attention of observers. Yet middle classes have also developed in these countries and growth rates buoyed by dynamic consumption (see the emblematic case of the mobile telephone sector) leave hope for global economic improvement in Africa.