Global Growth: Stability in Developed Countries, Slight Improvements Among Emerging Economies

The high degree of incertitude in the global economy is weighing on the financial health of companies. Two main factors are continuing to impact the situation, according to Coface.

Firstly, the weak level of global trade means that a strong recovery in growth is unlikely. Among developed countries – such as the Eurozone, where domestic demand remains lackluster - stable growth is forecast for the near-term, with 1.6% in 2016 and 1.5% in 2017.

The current situation in the US is not encouraging companies to create additional employment opportunites. In Japan, despite further fiscal policies in order to compensate for weak private investment, forecasts remain under pressure.

An improvement is expected, however, among emerging economies, with an increase in GDP growth from 3.7% in 2016, to 4.2% in 2017. This will be supported by Brazil and Russia leaving recession in 2017, shown by a recovery in financial indicators and lower inflation, as both countries have reached their low point.

Secondly, oil prices remain a key issue for emerging economies. Despite the “historic” OPEC agreement on output quotas, the Brent index is only expected to record moderate gains, with Coface forecasting US$44 in 2016 and US$51 in 2017. The return to equilibrium between supply and demand will take considerable time, according to Coface.

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