In Southern Europe, the recession is deepening, particularly in Spain, Italy and Cyprus. Coface is forecasting a recession rate of 2%, 1.8%and 1.3% in these countries respectively in 2012. Another source ofconcern is the eurozone sovereign debt crisis, which is now affecting growth in emerging countries, where Coface has noted a slowdown in activity.
In this more difficult context for companies, Coface has lowered its country risk assessment for Cyprus, Spain, Guatemala, India, Italy and the Czech Republic.
However, it has upgraded its assessment for the Ivory Coast, Indonesia, Nicaragua and Slovakia. This Risk Overview outlines the reasons why Coface has made these adjustments. It gathers the updated risk assessments on these 10 countries, and on 25 other countries too, whose situation has changed without requiring a modification of their risk assessments.
Coface has included two articles in the introduction. The first provides an update of the situation in Spain, a country where companies – all sectors and not just construction – are suffering from excessive debt and difficulties in the banking sector.
The article outlines the methods to stem the dangerous deflationary spiral trapping the country. A second article gives an update on Chinese companies and their vulnerability to the choice of economic policy. The authorities have two objectives: support activity with a targeted budget policy and stay on course for a rebalancing of growth towards consumption.