Country and sector risk Barometer Q2 2017

The second quarter of 2017 marked a new start for Europe, Russia and, on the sector side, for the automobile and agrofood industries in several countries.
In order to give companies a more complete picture of the risks worldwide, Coface is now publishing quarterly assessments of 12 sectors in 24 countries representing almost 85% of the world's GDP, as well as 160 country risk assessments.

Europe is accelerating, as evidenced by a wave of upgrades

Conflicting signals from the US economy (A2, low risk), along with the lack of clarity surrounding the fiscal stimulus package are signals for caution. Despite an improvement in GDP for Q1 (up from 0.7%, to 1.2%) and unemployment being at its lowest level in nearly sixteen years, household consumption is continuing to falter. Furthermore, credit growth is likely to slow, as a result of the expected rise in interest rates.

The recovering US energy sector has been upgraded to "high risk". Crude oil production and the on-shore oil services industry are growing and will continue to expand as a result of regulatory relaxation.
The Eurozone is in positive momentum, enjoying very favourable financing conditions, the support of investment for growth and a revival of corporate confidence. Insolvencies are down in almost all countries - except in the UK (which is being weakened by the slowdown in consumption) and in Belgium (the Eurozone’s fourth largest trading partner). In these two countries, insolvencies are expected to increase by +9% and +5%, respectively, in 2017 according to Coface's forecasts.

On this occasion, Coface is upgrading its assessments of Spain (where growth and foreign trade are particularly dynamic) to A2, and Portugal (which has withdrawn from the European Commission's excessive deficit procedure) to A3.

Several sectors are following this positive trend. Agrofood, at both regional levels in Western Europe and in France, is now assessed as "medium risk". This is the result of rising raw material prices and the end of disastrous climatic conditions for crops. Metals in Germany are now classed as "medium risk", due to the stabilisation of prices and the positive dynamics of its core markets. The automobile sector in Italy is now rated as "low risk".
Central Europe is continuing to benefit from improved assessments. This quarter, pharmaceuticals are classed as "low risk", due to increases in internal and external demand. Energy has improved its classification to "medium risk", at both regional level and in Poland, boosted by the profitability of oil refining companies and the anticipated increase in demand. Metals are rated at "medium risk" at regional level and in Poland, thanks to new investments in infrastructure and the recovery of the automotive sector.