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

PR64752

AMSTERDAM, June 13 /PRNewswire=KYODO JBN/ --

     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.

    (Logo: http://photos.prnewswire.com/prnh/20150513/743985 )

    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:

    (Photo: http://photos.prnewswire.com/prnh/20160610/377952 )

    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 Lorie,

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.

    http://www.atradius.com

    SOURCE: Atradius N.V.