Trends identified at the 2009 Coface Country Risk Conference

Excerpt from ICBA Advantage Issue 2

At the 2009 Coface Country Risk Conference, corporate, governmental and financial executives, who make decisions about export and risk in new markets, discussed the effects of downgraded country credit ratings across the globe.

Coface defines a credit crisis as a significant worsening in companies’ payment behaviour. A crisis may be limited to a country, region or sector – the current crisis is global. At the conference, Coface announced the downgrading of 22 country ratings and, for the first time, two of the biggest emerging countries, China and Russia, had their ratings put on negative watch. A country is placed on negative watch when its credit classification is at risk of being downgraded – this happens as the result of a turndown in GDP growth, or any economic, financial or political factor, which in turn may have an impact on company payment defaults in the country.

The slide above is from a presentation delivered by Olivier de Boysson, Chief Economist emerging countries, Societe Generale, used with permission of Coface. Click the image to go to a page to download the full presentation pdf.

On a worldwide level, Coface reports an anticipated growth differential of 3.1 GDP points from 2007 to 2009. By comparison, between 2000 and 2001 during the previous credit crisis at the collapse of the Internet bubble, the differential was 2.5 points. The new global growth forecast for 2009 is 0.9%. Coface forecasts the credit crisis will only end at year’s end.

(Information taken with permission from a Coface news release, 19 January 2009.)

(Excerpt from ICBA Advantage - The newsletter for trade credit insurance solutions - Issue 2. © 2009 International Credit Brokers Alliance (ICBA) www.icba-online.com. Company and product names are trademarks of their respective companies.)