Economic outlook and risk scenarios from Coface and Euler Hermes for 2011
Wednesday, December 15, 2010 at 04:44PM Excerpted from ICBA Advantage – the newsletter for trade and credit insurance solutions, Issue 7 – Autumn 2010.
Question: In 2010 we attempt to leave the economic crisis behind us. Do you believe we are beginning a slow, long-term economic recovery in 2011, or are we looking at a double-dip scenario? What would be the impact on your ability to maintain your risk appetite?
Yves Zlotowski, Coface Group Chief Economist: We do not believe in a “double dip“ scenario. In the U.S., The Fed is ready to support growth as long as needed. Activity should nevertheless slowdown in 2011, with more cautious fiscal policies in Europe. According to our main scenario, 2011 should see a world growth of 3.5% with 1.9% for advanced economies and 6.1% for emerging markets. This scenario is favourable to stronger risk appetite. We have nevertheless to watch carefully the various bubbles that may in return lead to new episodes of crisis in the longer term. Rapid increases in stock, real estate or the credit markets in booming countries like China or Brazil bear watching.
Karine Berger, Euler Hermes Group Head – Market Management, Strategic and Economic Studies: We think that world economic recovery will continue but will remain particularly fragile and slow. Even so, since the start of 2010 Euler Hermes has increased the volume of its credit insurance exposure by almost 10%, and we are ready and have the solid capacities to continue accompanying our customers in their requirements. Our reactions during the crisis were very rapid and rigorous. Therefore, even while the economic recovery is not yet fully convincing, we are able to adopt an identical risk underwriting policy to that followed prior to the crisis. And we are able to offer significant volumes of cover where growth is now strongest, particularly in Asia.
