Let the Sectors Games Begin


​This August, Brazil will host the Summer Olympics. Rio 2016 promises to be not only a major multi-sports event but also a magnifying lens on Brazil’s worst recession since the 1990's. In preparation for this year’s Olympiad, we looked at the fierce competition among companies around the world. 

Businesses, it seems, got an early start at their own Olympics. Indeed, companies will toil to not be overwhelmed by the adrenaline rush caused by volatile financial markets. One in four industries analyzed by Euler Hermes worldwide is now rated “sensitive” or “high” risk.

What should sectors of the economy do to survive and thrive in Olympic year 2016? Think and perform like professional athletes. The new Economic Outlook, titled “Let the Sectors Games Begin”, analyzes five must-have traits for companies. Clinch those, and you could make it to the winners’ podium. [more]

Companies will have to practice resilience, precision, strength, speed, and agility in this year’s modern pentathlon. They will fence disruption with epée and shoot nonpayment with a pistol. They will have to swim freestyle in emerging markets, show jump M&A hurdles and run across commodities whose prices continue to be too low for their own good. In fact, corporates in each sector will have to compete in a different Olympics discipline. 

The Metal industry will face the triathlon of demand, prices, and debt. Energy will have to cope with the marathon of lower oil prices. Construction will go for un-synchronized swimming (or sinking) across countries. Machinery will have to jump many hurdles. 

Transportation will do the splits like a great gymnast. Retail will wrestle for profits. ICT will have to stay alert when fencing with competition; Pharmaceuticals​ must break its own high jump (profit) record. 

Practice makes perfect. 

It is true that companies have been training for quite some time now, avoiding potholes in disappointing markets, tying up their working capital shoes and monitoring competition to prepare for a particularly challenging year. 

Anti-doping authorities - Central Banks for debt and Governments for stimulus – also decided to be stricter with non-performing athletes. The question is for how long. 

In the sports world, performance enhancing technology is frowned upon, sometimes banned. Connected gear, hidden motorization, magic swimsuits are among the wonders which could help break world records. 

In a world of disruption, it is hard not to draw a parallel with digitalization. Companies who can solve the 3D challenge of disruption (distance to the customers, dependence on infrastructure and divestment from R&D) may get a medal at the end. 

Ready, steady, and - as if there's any other option - go!

Ludovic Subran

Chief Economist

Euler Hermes

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