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Our Economic Insight series is a global knowledge series of 4-pagers with no definite frequency which addresses a wide range of topics from country focus to sector reviews to cross-cutting theme analyses (cross-country or cross-sector comparisons).

 

 Latest Issues


brexit

Brexit: What does it mean for Europe​?​

May 2016
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​If British citizens vote to leave the EU in a ‘Brexit’ referendum, UK real GDP growth could be cut by -2.8pp between 2017 and 2019 with 1,500 additional bankruptcies in a ‘soft leave’ scenario where a Free Trade Agreement is in place. Eurozone real GDP growth could fall by -0.4pp by 2019. Cumulated export losses would reach EUR17.5bn for goods and services, and EUR18.2bn for Foreign Direct Investments (FDIs). The Netherlands, Ireland, and Belgium would be the most affected through their exports and cross-investment positions. Germany, France, and the United States would also see a significant impact. The biggest losses will be concentrated in the financial services, automotive, machinery and equipment, chemicals and agri-food sectors.


 
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Brazil-dont-need-drama

Why Brazil did not need more drama right now​

May 2016​

Prolonged political uncertainty in Brazil will exacerbate an already difficult economic situation. GDP will contract by -3.5% this year, after -3.8% in 2015. Falling demand, strong inflationary pressures, growing deficits are on Brazil’s list of ailments. Insolvencies are expected to increase by +22% this year, after soaring by +25% in 2015. Tough policy choices are yet to come and more social unrest remains a major risk.

 
 
insolvencies-back

Insolvencies are back: Keep an eye on the domino effect

April 2016​

A spike in bankruptcies in Asia, Latin America and even the US will push the Global Insolvencies Index up in 2016. The Economic Research Department at Euler Hermes fo​recasts that insolvencies will increase by +2% worldwide this year. Reasons include too-low-for-too-long growth, increased turbulence in some sectors (commodities is a clear example) an​​d the domino effect of major bankruptcies. Western Europe is the only region where insolvencies are expected to decrease. This calls for cautious optimism, as increasing nonpayment risk in emerging markets is having a toll on exporters.​​

 
 
global_growth_flop


​Why is global growth a FLOP(s)?​

April 2016
The FLOP(s) are bottlenecks asphyxiating the economy: subdued trade and investment Flows – and antsy capital ones; segregated Liquidity with horns of plenty and drought-prone asset classes; low for longer Oil and commodity prices triggering unwanted second-round effects; hesitant and uncoordinated Public Policies; and possible downside Surprises.
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Switzerland-exports-2016


​Switzerland: Modest export restart in 2016 while survey signals further growing export risks​

April 2016

The year 2015 was affected by global currency turbulences and, in particular for Swiss companies, the decision of the Swiss National Bank (SNB) to end of the exchange rate cap of CHF1.20/EUR in January 2015.

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oil-march16


Oil prices: Time for (nasty) second-round effects?​​ 

March 2016
 
Oil prices plummeted to a 12-year low on January 20th. A  combination of factors helps explain this situation. First, the ongoing supply glut. On the one hand, more (Iran, U.S.) and bolder (ready to sell too close to breakeven) oil exporters. On the other hand, decreasing demand mainly due to the
Chinese slowdown.

Us payment

​Payment Behavior Index (PBI) shows deteriorating conditions​​

February 2016​


Euler Hermes' Payment Behavior Index (PBI) fell by 6.4 points over the past year, indicating a higher incidence of past due receivables, also consistent with slower GDP growth in Q4 2015 vs. Q4 2014.Nationwide bankruptcies are expected to rise by 3% in 2016 after six straight years of declines.


 

china 2016

6 reasons for MONKEY economics in China in 2016​

February 2016
 
Financial market turmoil steemed from both poor economic news and policy miscommunication especially on the exchange rate. 

 
 

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Brexit UK &US​​

​Brexit me if you can: Companies to suffer the most​​

November 2015​​
 
 
​​Increasing uncertainty around a possible Brexit will affect sentiment and might delay investment decisions. In case of a UK exit from the EU, companies’ turnover growth could be halved, if an FTA with the EU is signed, and contract without one. Three transmission channels explain this: direct export losses, falling margins (due to higher input and financing costs) and divestment.
 
   

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Transpacific cover

Trans-Pacific Partnership: a TIPPing point for global trade?

November 2015
 

In an attempt to promote trade on a mega-scale, 12 countries are currently negotiating a free ​​trade agreement known as the Trans Pacific Partnership (TPP). Future member countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zeland, Peru, Singapore, The US and Vietnam.
 
 

 

euler hermes

 Expo Milano 2015: The end or the beginning?  

October 2015

Six months after its opening, first results show that Expo Milano almost reached the official target in terms of number of visitors (20mn) and avoided a less happy ending as was the case in 2000 in Hanover (see Chart 1). While 30% of total visitors were expected to be foreigners, the final number stood at 25% - strong presence of American, Chinese, German and French visitors to be noted. In total, we estimate EUR6bn of revenues from tourism flows. This compares with a total EUR3bn cost of infrastructure projects. That being said, other indirect costs need to be confirmed in order to assess the net realized profit.

 

 

 

 
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US Export

United States: Trying to feel the export pulse​​​​

 
October 2015
 

​The context: A risk of domesticalization for U.S. companies Exports fell markedly (-3% in the first half of the year) on the back of a stronger dollar and a slowdown in global demand. American exporters can feel the heat; World trade growth has contracted by -14% in value in the first half of the year, as a result of currency carnage in emerging markets and lower revenues from trading commodities. Euler Hermes expects trade to contract by -2.0% in value this year and to moderately recover next year (+2.6%). 

euler hermes

Germany and the Netherlands: Rivals on the football field, partners in the export game?

September 2015

A recent survey among Dutch and German exporters conducted by DNHK and Euler Hermes shows that one out of two companies still finds it difficult to increase turnover and margins (See Chart 1). Reasons invoked are similar for both​ countries: low consumer demand and increasing deflationary pressures due to fiercer competition. One in four Dutch companies gives declining sales prices as the main reason for pressure on turnover, compared with 1 out of 5 German companies.
 

 


euler hermes

Iran: Back in the game?

September 2015

If the agreement reached on July 14 between Iran and the P5+1 is fully ratified, some sanctions imposed on Iran by the U.S., the European Union and the UN will be removed in 2016. In return, Iran will decelerate its nuclear programme.​

 

 

 
 
 
 
euler hermes

​China: Great Wall, Great Mall, Great Fall? Not really…

 September 2015
We revised down our growth forecast for China this year to +6.8% in 2015 and +6.5% in 2016 with a possible deviation of +/-0.2pps each year. This revision reflects lower growth in exports and investment, a less favorable financing mix and prevailing deflationary pressures...
 
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captureeifedquake.jpg


Fed quake: Who will bear the BruNTS ?

August 2015

 

The Federal Reserve (Fed) will raise interest rates and tighten its monetary policy by the end of 2015. Compared to previous tightening cycles, communication has been more transparent for anticipations to be better managed. This telegraphed tightening cycle will be gradual.


 

eicuba.jpg

Cuba : Viva la (economic) Revolution

August 2015


​Three game changers for Cuba : (i) the progressive easing of the economic restrictions by the U.S.; (ii) a new Cuban law promoting foreign investments and (iii) the launch of the "Cuba Porfolio of Opportunities for Foreign Investment", worth USD15bn across 246 projects.


 


eipreview.jpg



Abolition of RUSF payments to boost exports to Turkey by USD20.2bn in 2015-2016

July 2015

​A significant import barrier, the Resource Utilisation Support Fund (RUSF) payment, 6% of the value of all imported goods, was abolished for around half of Turkish imports in April 2015. This policy change should boost the volume of imports (+2.5pps in 2015), exports (+1.7pps) and investment (+2.2pps) while the impact on GDP growth will be modest (+0.1pps), due to a worsening of net exports.

 

economicinsightaecjune2015.jpg

​The ASEAN Economic Community: A big bang for regional supply chains?​

June 2015


The AEC is a tremendous opportunity to strengthen the ASEAN block. Singapore, Thailand and Malaysia will benefit the most, already acting as springboards to international value chains.

 

euler hermes

Payment behavior: Who's paying the piper?

June 2015

 

  • In 2015, average Days Sales Outstanding (DSO) for listed companies in emerging markets is expected at 5 days above that of advanced economies. They were 10 days below in 2007

 

 
 
euler hermes

Low energy prices more of a canadian curse than blessing

June 2015​

 

  • The sharp decline in oil prices has created a headwind for the Canadian economy whose prognosis had otherwise been generally healthy.

 

 

> Download the report

 

 
 
Italy-Expo-Milano.jpg

April 2015
 
  • The Expo will have a limited but positive contribution of 0.1pp to Italian GDP this year. In total, including firstround effects, the Expo could bring up to 0.4 point of GDP from tourism (15 million visitors), export revenue (+10% in some sectors), additional output (EUR6bn) and jobs (~100,000).
  
 
 

 

 
euler hermes

Switzerland: Survey highlights growing export risks


April 2015
 
  • Not surprisingly, currency risk is currently the most important issue for Swiss exporters, after the decision of the SNB to end the FX cap of CHF1.20/EUR in January 2015. In a survey, conducted by the Berner Fachhochschule and Euler Hermes, 88% of companies stated that they were affected by currency risks in the last two years (45% strongly and 43% somewhat); with 69% of companies expecting pressures to compound in the year to come.
     
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euler hermes

Mexican exports: Time to bring in the Mariachis?
March 2015

 

  • Mexico is among Euler Hermes’ Top 10 export winners in 2015 and 2016
    Mexico should continue to show strong export performance in coming quarters. Euler Hermes expects real exports to grow by +5.0% in 2015 and by +5.3% in 2016, driven by strengthening demand in the United States and improved competitiveness of local Mexican industry.

 

 
 

 

 
 
germany-exports 
 

Germany’s 3D export strategy to bring an additional

EUR36bn in 2015

March 2015

  • German export growth is likely to accelerate moderately to +4.5% in volume during 2015, after expanding +3.8% in 2014. In values terms, 2015 exports are expected to increase by 2.7%
      
oil-latin-america 
 

Latin America: fall in oil prices will cut growth by -0.4pp

February 2015

  • Oil price will remain far below 100USD/barrel in 2015. The fall in the oil price since July 2014 has been impressive, with the price of Brent crude plummeting by over 50%, going below 40USD/barrel in mid-January 2015, the lowest level since 2008.
  •  
Greek-election 

Greece and Europe: The sequel Political will, Time and Value-at-Risk

January 2015
  • As expected, Syriza emerged as the winner of this Sunday’s legislative elections obtaining 149 seats out of 300 and formed a coalition with right-wing Independent Greeks (ANEL). This brings majority of 162 seats out of 300 for the governing coalition, led by Syriza’s Alexis Tsipas.

 

ECB 
 

FAQ: #QEmania - What does it mean for European companies?

January 2015

  • D-Day! The ECB has announced its first round of Quantitative Easing (QE) with monthly purchases of €60bn of ABS/covered and public bonds (EU institutions, agencies and government) until at least September 2016, with any extension dependent on the inflation outlook.

 

US-exports 
 

U.S exports - An additional USD88bn of U.S exports in 2015

December 2014

  • Demand for U.S. exports is highly sensitive to the strength of the global economy. As shown in Figure 1, the two move in virtual lock-step. Unfortunately the global economy is about to enter its fourth straight year of lacklustre growth. Euler Hermes forecasts real GDP growth in Advanced Economies of only +2.0% in 2015 and +4.3% in Emerging Economies.

 

China growth - What could possibly go wrong? 
 

China growth - What could possibly go wrong?

December 2014

  • Once upon a time, a "grow better" blueprint. In 2011, the Chinese government released its 12th five year plan. The new leadership's focus was to rebalance the economy, driven by concers that the Chinese growth model was losing steam and the economy's composition was suboptimal.

 

US businesses' payment behaviors point to slowed GDP and mixed picture for key industries 
 

US businesses' payment behaviors point to slowed GDP and mixed picture for key industries

November 2014

  • Receivables at Risk (RAR) Indexes Suggest Continued Modest U.S GDP Growth. The RAR Indexes currently indicate that the strong growth of thee third quarter is likely yo slow somewhat to approximately +3% in the fourth quarter, based on Euler Hermes' assessment of severity and length of past due payments.

Chinese exports 2014-15: Another $300bn to make?
 

Chinese exports 2014-15: Another $300bn to make?

October 2014

  • Despite a slowdown, China will maintain its position as the world's export leader. Chinese GDP is expected to grow by +7.5% in 2014 and 7.4% in 2015. In line with government targets, importantly GDP drivers are set to continue to adjust and make economic growth more balanced.

 

 

 

cover-Economic-Insight-spain-oct14

Spain: Cautiously taking the bull by the horns

October 2014

 

  • The Spanish economy is out of recession, Q2 growth surprised on the upside as GDP increased by +0.6% q/q, driven by a rebound in domestic demand but especially household spending. More supportive fiscal policy and a continued strengthening of investment should support activity in coming months.

 

Russia and the West: tough love?

 

​Russia and the West: tough love?

September 2014

 

  • The conflict between the West and Russia over its alleged involvement in the Ukraine crisis has intensified once again, with additional sanctions on Russia imposed by the U.S and the EU in July - now including elements of what policymakers call level 3 sanctions - and further measures possible in the near future.

 

 

Non-payments in Italy: it's not over... Yet!

Non-payments in Italy: it's not over... Yet!

September 2014

  • The Days Outstanding Sales (DSOs) are expected to moderate slightly in 2014 but remain significantly above the regulatory threshold, at 95 days on average against 97 in 2013. In addition, divergence across sectors continues to be very high.

 

 

Don't cry too much for Argentina

Don't cry too much for Argentina.

August 2014

  • After a USD100bn default in public bonds in 2001, Argentina reached an agreement with 93% if its bond-holders - who have been paid on time since then - to restructure. It is the remaining 7% (the holdouts) that pose the current problem. The USD11bn due to these holdouts was put aside by the Government and not considered official public debt, until now.  

 

Fertilizers: The seed growing secretly

 

Fertilizers: The seed growing secretly

August 2014

 

  • Estimated at $3700 USD billion in 2013, the world chemicals market is comprised of 5 activity groups with disparate characteristics. Fertilizers account for 30% of inorganic chemicals, which itself makes up 16% of the chemicals market. As a whole, fertilizers are equivalent to 4.5% of world chemical sales ($160 USD billion).

 

The European electricity market under strong pressure

The European electricity market under strong pressure

July 2014

  • Electricity is by nature a non-storable product. Due to this, the production of electricity is equal to the demand in a region at the time. This demand reacts to economic growth trends. However, the strength of this link lessens as the movement towards energy savings and efficiency catches up.

 

Road Transport: Labor costs explain the large gap in profitability in Europe

​Road Transport: Labor costs explain the large gap in profitability in Europe

July 2014

 

  • The Road transport sector in Europe is largely dominated by a majority small and medium companies. We estimate approximately 95% of EU firms with fewer than 10 employees, while the French INSEE counts 97% of companies with fewer than 50 employees. This extreme fragmentation currently finds itself in a low-growth environment.
2014 World Cup: more inflation than growth for Brazil 

2014 World Cup: more inflation than growth for Brazil

June 2014 

 
  • The hosting of a major sporting event has not and will not have a major positive impact on Brazil's economy. The investments carried out for the 2014 Soccer World Cup and the Olympic Games were not able to prevent a sharp slowdown of the Brazilian economy over the past three years.  
  • See our infographic 

 

Thailand: Another coup challenges the country's economic resilience ?

Thailand: Another coup challenges the country's economic resilience ?

 

June 2014 

 

  • Thailand's economy is facing a triple threat: political instability, deterioration in financing conditions and a slowdown in domestic demand. Tapering by the US FED and political turmoil accelerated short-term capital outflows while long-term capital flows remained resilient.

 

Renzimania: Will charm survive tough reforms ?
April 2014
  • Matteo Renzi, new Prime Minister since 22 February 2014, unveiled a package of tax cuts and other measures that are likely to support the economy in the short-term. Business confidence, already recovering since several months, shows signs of acceleration since Renzi came in place. The return in confidence is essential for the economy and for foreign investors and we expect a positive impact of consumer spending and private investment in 2014-2015.  
Putinomics: Tightrope walking
April 2014
  • The political crisis in Ukraine, which culminated in the effective overthrow of the government and ousting of President Yanukovich on 22 February 2014, escalated into a serious conflict between Ukraine and Russia. The latter has not accepted the forced regime change in Kiev. Meanwhile, ethnic Russians who account for about 60% of the Crimean population staged large pro-Russia protests against the new interim government in Kiev.
Tire industry on a roll
April 2014
  • A few major actors dominate the global market. There are an estimated 1,500 tire manufacturers in the world, including around 1,400 in China. The tire industry is highly sensitive to changes in the prices of its main raw materials: Natural and synthetic rubbers. See all details in our report.
  • See our infographic

The Reindustrialization of the U.S. ; an update 

The Reindustrialization of the U.S. ; an update

March 2014
 
  • In December of 2012, Euler Hermes Economic Research published an analysis entitled "The Reindustrialization of the United States" which predicted a resurgence in U.S. manufacturing. In this update, we go back to find that the fundamentals underlying the analysis to be not only intact but in some cases even stronger.
Fewer non-payments in 2013 for Italian companies, but more severe  
 
 
  • After two years of recession, the first signs of a recovery seem to have emerged in Italy and GDP growth is expected to pick-up progressively in 2014 and 2015 although downside risks prevail, notably given weak political stability
  • See our infographic
 
 
China: 6 firms out of 10 managed to reduce their payment terms in 2013  
 
 
  • Almost 7 firms out of 10 saw their turnover rise in 2013 compared to 2012, while real GDP grew at a stable pace: +7.7% in 2003. This favorable trend is especially observed in companies in the agricultural and construction sectors, which benefited from a robust domestic demand (+8% in 2013)
 
 
The Fragile 10: Turbulences but no crash
 

The Fragile 10: Turbulences but no crash
February, 2014

  • A perfect storm? The tapering by the U.S. Fed, the slowdown of demand in China and anticipated elections around the globe have caused (in that order) some new concerns about emerging markets (EM). To watch - Our Fragile 10: Argentina, Indonesia, Turkey, Brazil, South Africa, India, Chile, Colombia, Philippines and Mexico; our Weak 4: Thailand, Russia, Ukraine and Venezuela.
Frequently Asked Questions (FAQ) on deflation risk in the eurozone
 
February, 2014
  • Discover the answers to these critical questions: What are the main drivers for the current disinflationary cycle? Which sectors have been most impacted? What is the impact on the private sector (and on the public sector)? Should we fear deflation risk in the eurozone? 
 
 
 

 

 

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