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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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
The Fragile 10: Turbulences but no crashFebruary, 2014