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13.06.2016 – 10:02

Atradius N.V.

Atradius: World Economy 'Slower for Longer', Warns for Insolvencies in Eurozone Periphery

Amsterdam (ots/PRNewswire)

The Atradius outlook for global economic growth is 'slower for longer', with five primary downside risks that could drag down the economic and insolvency outlooks.

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While the turbulence experienced in the first months of 2016 has subsided the underlying issues persist. Low commodity prices, tepid international trade growth, debt overhang, and ineffective monetary and fiscal policies are key contributors to the current global slowdown. The baseline growth forecast for 2016 is only 2.4%, 1.6% in the Eurozone, and this may deteriorate further through the year. After an overall picture of improving insolvency ratios in 2015, the insolvency forecasts for 2016 are less optimistic. In most countries the current default level will stabilise but at generally high levels.

In its biannual Economic Outlook Atradius identifies the five top global risks that would drive this:

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1. A hard landing in China, defined by GDP growth below 5% this year,
   would have a strong impact worldwide, reinforcing the negative 
   effects already seen on global trade, commodity prices and 
   financial turbulence.
2. US monetary policy has a similar global impact. A steady, 
   well-communicated tightening schedule is expected. Still, a poorly
   communicated, or even a well communicated but badly received 
   course of action, is a clear threat. The accompanying financial 
   turbulence would pose a large drag on global growth, particularly 
   in emerging markets.
3. Persistently slower growth in the eurozone, despite aggressive ECB
   monetary stimulus, could lead to longer term stagnation and 
   elevate political uncertainty, already heightened due to the 
   Brexit referendum.
4. A rapid rise in the oil price would increase costs for oil 
   importers, removing a key benefit for growth in many advanced 
   markets such as the eurozone.
5. Deleveraging taking off would also hold back growth in advanced 
   markets, suppressing demand. 

These last three risks would have a moderately negative impact on EU countries, with most becoming more acute in the periphery countries.

Global financial market volatility would especially hurt emerging market economies, whose economic outlook is already under pressure. More restrictive access to finance at a higher cost would further drive up the already high insolvencies that we now predict in key markets like China and Brazil.

"The financial turbulence seen earlier this year provided us with a small taste of what could come later in 2016 should China land hard or if the Fed monetary policy is not well communicated or badly received," said John Lorié, global chief economist at Atradius. "The economic outlook for advanced markets in Europe is mediocre with risks to the downside as well. Should these risks materialise, the impacts on insolvencies would be felt most strongly in countries like Italy, Greece and Portugal, where levels are still high".

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide and has a presence through more than 160 offices in 50 countries. Atradius has access to credit information on 200 million companies worldwide. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit.


Atradius Corporate Communications
Christine Gerryn
Tel.: +31 20 553 2047

Original content of: Atradius N.V., transmitted by news aktuell

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