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Saturday 21.10.2017 | Name days: Severīns, Urzula

Coface: Eurozone to suffer from interdependence and delay in payments

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Economic development in Europe will slow down this year, as well as a little recession by -0.1% will be observed, note international business risk insurers Coface.

 Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUUSA economics is stabilizing and a little increase in GDP by +1.6% is predicted. Also economics of Japan will get back balance this year and even report an increase by 1.8%. Also growth of developing countries will continue this year with increase in GDP by 5.1% , however, not as fast as in 2011.

These prognosis point at a systemic crisis in the world, centre of which is eurozone, not a global crisis as in 2008-2009, when all world economies suffered the same, conclude experts of Coface.

The company points at the fact that a substantial worsening of payment discipline was observed last year in Europe and whole world. In Eurozone, 28% of payments were delayed or suspended, while in the world, on average, 19% of payments were not made.

Coface president François David expresses confidence that slow economic development of Europe together with low crediting possibilities might substantially affect financial stability of companies and, consequently, – credit risks.

Coface cuts business environment ratings in Europe:

Italy and Spain – rating for both Southern European countries was cut by one degree to A4. The reason for that is big national debt of Italy and big amount of private business debts in Spain. Coface points attention to the fact that around 50% of payments in these countries have been affected by difficulties.

Hungary – business environment rating cut from A4 to B. As 66% of Hungary’s export are in Eurozone, crisis in Europe will substantially affect tits development and the country will be hit by recession.

Croatia – business environment rating cut from A4 with a negative tendency to B. Although in 2011 the country improved its economic power, this year it will be hit by recession, because domestic market is still weak. Business development is hindered by low crediting possibilities.

Slovenia – a negative prognosis added to rating A2. Export which makes up to 60% of GDP, will be affected by decrease in demand in European countries.

Slovakia – a negative prognosis added to rating A3. Growth will slow down in 2012, it will be caused by decrease in demand in Eurozone (90% of GDP is made of Export), decrease in demand in Germany, as export to Germany makes up to 23% of the whole export.

Baltic is recovering

In spite of negative tendencies in Southern Europe, Coface still has a positive view on Baltic states. Current Coface ratings for Baltic states: Latvia – B, Lithuania – A4, Estonia – A3.

The lowest rating among Baltic states is for Latvia. The reason for this are problems with Parex bank and entering the International Monetary Fund programme. Estonia has the highest rating A3 due to entering Eurozone. «We predict that as positive recovery tendencies of Latvian economy continue, Coface could improve rating of Latvia in this summer,» say the insurers.

Ref: 103.110.110.210


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