D&B Country Risk update – November 2012
This Country Risk update has been put together by a team of economists using the most up-to-date information to provide a snapshot of the latest country risk situation, and provides an excellent overview for those exposed to cross-border credit or investment risks
D&B believes trade contagion – the negative effects on demand of falling imports and exports – is one of the most pressing challenges to a smooth and orderly moderation in global economic growth into 2013, besides wildcards such as the euro-zone’s integrity and the US fiscal ‘cliff’ if no bipartisan accord is reached on the budget. The spread of falling demand via trade routes is not being accelerated by a collapse in trade finance availability (as it was in 2009), but is nevertheless being seen in regions so far spared.
In July, container exports from South and Central America fell 8% y/y and those from Sub-Saharan Africa (still heavily focused on Europe trade) fell 21% y/y. It is possible that economic forecasts and policy responses are lagging an unfolding shock in global trade volumes. Already, the sinking Mediterranean economies have helped cut 0.5-1.0 in percentage points of nominal GDP growth from the Asia-Pacific exporting countries since Q4 2011, with effects also starting to be seen in South America from Q1.
Some recent news & events per continent
Angola: The outlook remains positive but a new oil law may prove problematic.
Morocco: A weak first half performance points to lower economic growth in 2012.
Iran: A collapse of the unofficial exchange rates triggers anti-government demonstrations.
Kuwait.: Tensions between the executive and parliament remain elevated.
Turkey: Security issues stemming from the Syrian crisis weigh increasingly on the risk outlook.
United Kingdom: Stagnation bodes ill for the public finances, but inflation has eased.
Czech Republic: The central bank cuts the policy interest rate to a record low as economic growth falters.
Uzbekistan: The country remains a growth leader in the former Soviet space.
Korea (South): The export-oriented manufacturing sector continues to struggle due to the global downturn.
Thailand: Payment risks could rise in 2013 amid a renewed downturn in the export sector.
Bolivia: Inadequacies in the regulatory framework heighten socio-political and economic risks.
United States: Economic indicators signal slow but relatively stable growth ahead.