Credit insurer Euler Hermes expects the global economic recovery to be confirmed out to 2012. It will, however, remain very uneven from one geographic region to another in 2011, with a slight slowdown overall. After 4% in 2010, world growth will drop back to 3% in 2011 before rising again to 3.3% in 2012. After making good the 2009 slump in 2010, world trade is forecast to grow by around 8% in both 2011 and 2012.
The 2011 slowdown will be more pronounced for OECD countries than for emerging regions, says the insurer. “The euro zone has lost out in the present global recovery, with GDP not expected to return to its 2008 level until the end of 2012, due in particular to the fiscal consolidation measures,” points out Wilfried Verstraete, Chairman of Euler Hermes’ Group Management Board. Against this backdrop, the decline in corporate insolvencies is expected to continue, down by 5% in 2011 after falling by 4% in 2010. Corporate insolvencies will nonetheless remain at very high levels next year.
“We believe there will be a global recovery out to 2012,” says Verstraete. “However, some risks and uncertainties persist, particularly for 2011. To begin with, growth in Asian countries, which, excluding Japan, have already largely erased the impact of the crisis, will undoubtedly drop back to a more balanced, and therefore more moderate, pace. Also, the major fiscal consolidation measures adopted by developed countries whose public finances have deteriorated significantly as a result of the crisis and of the stimulus packages implemented are likely to hamper growth.”
Euler Hermes estimates that growth in Asia will slow by more than 1 percentage point of GDP to around 7% in 2011 after 8.5% in 2010, in line with the slowdown expected in China, where growth is expected to drop from 10% in 2010 to 8.8% in 2011 and in 2012. The outlook for 2012 remains good for the region as a whole with growth of 7.4%.
At the same time, after rebounding to 2.8% in 2010, US economic growth is set to slow slightly to 2.2% in 2011 given the inadequate recovery in private sector employment. However, the pace of recovery is expected to pick up to 2.4% in 2012. The trend is likely to be similar in Europe, where fiscal consolidation will limit the rebound in 2011, particularly in the countries that have benefited least from the recovery.
All in all, Euler Hermes estimates that, after reaching 4% in 2010, growth in the world economy will drop back to a moderate 3.0% in 2011 before picking up again to 3.3% in 2012. The slowdown forecast for 2011 will be more pronounced for OECD countries. Trends in world trade are expected to be similar, with growth dropping from 14% in 2010 to 8% in 2011 before moving up to 9% in 2012.
Corporate Insolvencies Remain at a High Level
Euler Hermes’ Global Insolvencies Index fell by 4% in 2010 compared with an initial forecast of 3%. After record increases in 2008 and 2009, with the Global Insolvencies Index rising by 28% in each of those years, corporate insolvencies began to decline again in many countries in 2010. More than half the countries surveyed reported a smaller number of corporate insolvencies in 2010 than in 2009. The decline was stronger in Asia (12%) and the Americas (8%) than in Europe, where the situation of businesses remains more difficult in some countries, such as Greece, Portugal, Italy and Ireland.
Although less robust in 2011, the gradual recovery in the world economy should pave the way for a drop in corporate insolvencies (forecast at 5% in 2011) in a larger number of countries. The decrease will not, however, manage to wipe out the record rises in corporate insolvencies recorded in 2008 and 2009.
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