Sector risks globally are better oriented since mid-2013 but the anticipated 2014-2015 global economic recovery will be too modest and heterogeneous to fully benefit a majority of sectors all around the world, according to a report by Euler Hermes.
“It will take some time for the global economic growth to feed through to the bottom lines of companies of all sizes and sectors, especially in still-fragile Europe,” explained Ludovic Subran, chief economist, Euler Hermes. “In many sectors we do not foresee an accelerating recovery path in 2014.”
Euler Hermes monitors sector risks for 17 industries in 72 countries, representing 95% of worldwide GDP. Sector ratings (low, medium, sensitive and high risk) are established for each country and aggregate proprietary forecasts in demand, financing, profitability and the business environment.
In 9 out of 10 cases, sector risks by country remain at 2013 levels. Overall, sectors rated “at risk” remain in the majority for 2014: 49% at medium risk and approximately 25% at sensitive or high risk. In other words, only 25% of sectors exhibit sound enough fundamentals or outlooks to begin 2014 with a low level of risk.
On a global scale, textile, construction and air transport sectors began 2014 with the highest level of risk, while chemicals, pharmaceuticals and agrifood kept their risk levels lowest.
Resilient to the global cycle up to 2013, Asia Pacific remains the region with the lowest level of sector risk for 2014. However, its 2014-2015 challenges are among the largest. APAC began 2014 with some sectors (textile, metal and construction) facing structural weakness in some countries.