The strength of emerging countries rebalances world growth. The
decoupling of emerging countries and
developed countries has finally occurred, but in a specific and new way.
As stakeholders in the world economy,
emerging countries could not escape
being affected -- where companies
were too heavily indebted, the growth
contraction brought on credit crises
(i.e.: significant increases in payment defaults). But, in most cases, the emerging
countries managed this crisis independently. They demonstrated their ability
to learn from previous crises and to rely
on solid fundamentals, which allowed
them to implement recovery policies.
If the end of the credit crisis is confirmed, the 2010 recovery in industrialized countries is of high risk because of
threatening bubbles:
◗
;The;bubble;in;public;debt;is;espe-cially;dangerous. It is not so much
the risk of sovereign defaults that is
feared, but rather the need to quickly
implement budget restriction policies
that are detrimental to growth and
therefore to companies.
◗;The;overcapacities;in;China;have
to;be;monitored. After strong
credit growth that supported Chinese
companies, the authorities have
decided to restrict the credit supply
in overcapacity sectors. This “
go-and-stop” policy, typical of China, could
destabilize fragile companies.
◗
;The;asset;price;bubble;(stock;mar-kets);can;also;affect;the;economy.
Sharp stock market volatility can be
expected in industrialized countries
due to optimism in the financial markets that is out of sync with the real
economy’s recovery.
The bursting of these bubbles is likely
to generate new negative shocks for
companies (“W” recovery scenario). A
relapse would affect companies, many
of which are now quite weakened after
two years of low activity. However,
Country;Ratings;Changes
Country
October;2009
New;Rating
January;2010
Asia
Hong Kong
A2
Japan
A2
A2
A2
Malaysia
A2
Taiwan
Singapore
A2
Americas
Canada
A2
A2
A2
A2
Industry news
Chile
A2
Colombia
Dominican Republic
B
Jamaica
United States
C
A2
A4
B
C
Western;Europe
Austria
A2
Belgium
A2
France
A2
Germany
A2
Greece
A3
Netherlands
A2
Norway
A2
Sweden
A2
Emerging;Europe
Albania
A1
Poland
A3
Turkey
D
A3
B
Middle;East
Israel
A3
United Arab Emirates
A4
A3
Yemen
C
Oceania
Australia
A2
New Zealand
A2
D
A2
A2
Coface country ratings indicate the average level of risk presented by a country’s companies on their
commercial transactions. The ratings do not assess sovereign debt.
