Light at the end of the tunnel for the Eurozone?
- significant government borrowing requirements (mainly in the Southern peripheral countries: Greece, Italy, Spain)
- lack of competitiveness
- insufficient job creation and
- internal imbalances.
“Though the Eurozone continues to face headwinds, economically, socially and politically, we are noticing positive signals," confirmed Wilfried Verstraete, chairman of the Euler Hermes group. “Milestones were reached in 2012 in addressing the lack of integration among Eurozone members such as the ratification of the European Stability Mechanism (ESM). However, the commitment to support the private sector is still lacking and poses some concerns for a full-fledged Eurozone recovery. That is why we only foresee a slight pick up of +1.4% of the Eurozone in 2014.”
Emerging countries remain world growth drivers
“Although down from +9.2% in 2011 to +7.6% in 2012, China remains nonetheless indisputably the largest contributor to global growth,” said Ludovic Subran, Euler Hermes’ chief economist. “Like the rest of Asia, China will face production overcapacity due to fewer outlets in the West, and inflationary pressures due to an expansionary monetary policy. However, with some improvement in global demand, Chinese GDP should grow by +8% in 2013 and +8.2% in 2014.”
In comparison, GDP growth in established markets remains comparatively weak (+1.1% in 2012, +1% in 2013), as disparities persist:
- The United States continues to grow at a moderate pace (+2.2% in 2012, +1.9% in 2013), despite domestic fears about the fiscal uncertainties that put a damper on business investment.
- The United Kingdom (-0.1% in 2012, +0.8% in 2013) and Japan (+1.7% vs. 0.3%) face headwinds.
- Most Eurozone countries’ growth remained flat or negative.
Global Insolvencies gather momentum
(-9% over 2010 and 2011). The decline in global activity that began in 2011 quickly brought a trend break in insolvencies.
A 12% decline in insolvencies for the Americas, where the rise in Brazil insolvencies was more than offset by pronounced decrease in the United States and Canada.
A rise in insolvencies in Europe, significant for France (+2%), Northern Europe (+4%) and, especially, Mediterranean countries (+22%) – Germany (-1%) and UK (-6%) were the main exceptions.