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Wednesday 13.12.2017 | Name days: Veldze, Lūcija

Overall business risk in the world reaches record-high level

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUCoface credit insurance company has upgraded Latvia’s outlook to A4 in its latest business risk review. Although ratings have been upgraded for several other European countries, the general risk level in the world is record-high.

Coface has reduced the business environment outlook for the world’s largest economies – USA and China, as BNN was informed by Coface.

Considering stable growth and reduced export reliance on Russia, Coface has ungraded Lithuania’s and Slovenia’s outlook to A3 (Estonia’s rating remains the same). Latvia’s and Romania’s outlook has been upgraded to A4. In Western Europe, ratings have been upgraded to France (A2) and Italy (A3).

In total, the current business risk level in the world is at its highest since the beginning of the century. The average corporate risk in all 160 countries is on B level, which is a ‘major risk’ level.

Coface has reduced global growth outlook to 2.5% for this year. This can be explained with the lack of market outlets and low inflation level. Credit risk rating has also been reduced for the world’s leading economies – USA and China.

«Many countries around the world suffer from China’s rapid decline in exports, tourism and investments. In addition, businesses are negatively impacted by fluctuations in different markets, especially oil markets,» – notes Coface Director in Latvia Arnis Blumfelds. «Political uncertainty, which significantly affects businessmen and households remains the biggest risk in Europe. After Brexit vote, Coface reduced Britain’s GDP growth outlook by 0.6 percentage points to 1.2%. Eurozone’s growth outlook remains stable for 2016 (1.7%). This is largely due to household consumption, investments made by the private sector, reduced oil prices and low interest rates of the European Central Bank. All of these factors have had a positive effect on the business environment this year.»

A new category was added to the rating this quarter – ‘E’ or ‘extremely high credit risk’. This rating has been given to countries like Syria, Libya, Afghanistan, Iraq, Iran, Cuba and Venezuela.

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