global 2019 sectors analysis outlook in the economic … · 6/6/2019 · 10 coface, the most agile...

GLOBAL 2019 SECTORS

ANALYSIS OUTLOOK IN THE

ECONOMIC SLOWDOWN

SARAH N’SONDE , HEAD OF SECTORS

PORTUGAL COUNTRY RISK CONFERENCE

PORTO, MAY,29TH

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Global Economic Outlook

Main Risks

• Politics (examples: Brexit, Italy)

• Protectionism: e.g. the US-China trade war

• Emerging Markets: capital outflows

• Commodities prices volatility

2

FROM PROTECTIONISM AND THE GLOBAL INDUSTRY SLOWDOWN

WORLD TRADE SUFFERING

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

Q1 2

00

8Q

3 2

00

8Q

1 2

00

9Q

3 2

00

9Q

1 2

01

0Q

3 2

01

0Q

1 2

01

1Q

3 2

01

1Q

1 2

01

2Q

3 2

01

2Q

1 2

01

3Q

3 2

01

3Q

1 2

01

4Q

3 2

01

4Q

1 2

01

5Q

3 2

01

5Q

1 2

01

6Q

3 2

01

6Q

1 2

01

7Q

3 2

01

7Q

1 2

01

8Q

3 2

01

8Q

1 2

01

9Q

3 2

01

9 f

Forecast: Q2 to Q4

2019:0.2-0.3%

Q1 2019:-1.1%

World trade

(quarter on quarter % change, Coface’s forecast)

COFACE, THE MOST AGILE GLOBAL TRADE CREDIT PARTNER IN THE INDUSTRY 3

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

growth period industrial production

60 months22

months56

months

27 months

30months

25months

THE END OF A VERY LONG EXPANSION CYCLE

INDUSTRY IN THE EUROZONE:

Euro Area: Industrial Production (3 month moving average, year-over-year change in percent)

Source: Eurostat, Datastream, Coface


SECTOR RISK ASSESSMENTS IN WESTERN EUROPE

COFACE BAROMETER Q1 2019

Low Risk

Medium Risk

High Risk

Very High Risk

Upgrade

Downgrade

Business Default Risk

5

POLITICS (UK) AND THE INDUSTRY CYCLE (GERMANY)

2 PITFALLS FOR BUSINESSES IN EUROPE:

Business Insolvencies in the UK

6

POLITICS (UK) AND THE INDUSTRY CYCLE (GERMANY)

2 PITFALLS FOR BUSINESSES IN EUROPE:


TRADE DISPUTE BETWEEN CHINA AND THE UNITED STATES

PROTECTIONISM:

New tariffs:

┃ the US hiked tariffs on USD 200 billion worth of imports from China to 25% from 10%

┃ China retaliated with higher tariffs on 60bn of US imports

┃ No effective impact before June 1

Possible next steps:

┃ US / China: Final round of tariffs on around USD 300 bn of remaining US imports from China?

┃US / car imports:

• 25% tariffs on US car imports (deadline was May 18 but the US postponed the decision – now due in 6 months)

• What scope: EU only? Car parts too?

5

5,7

6,4

6,6

7,3

7,8

7,9

9,2

9,8

11,3

15,2

23,5

0 5 10 15 20 25

Elec. Transformers, static converters & inductors

Agri products

Plastics

Travel bags

Lamp, lighting

Steel and iron products

Computers

Auto parts

Seats

Furnitures

Parts of computers

Telephones

China’s products in the “USD 200 bn” list

-12,7%

-4,4%

-3,9%

-3,7%

-3,7%

-3,3%

-1,6%

-1,2%

-0,8%

0,0%

0,4%

0,6%

0,9%

1,3%

1,9%

2,0%

2,1%

2,5%

3,1%

3,6%

4,4%

9,8%

10,3%

-20% -10% 0% 10%

Clothing

Auto & Parts

Vehicles Parts

Vehicles

Wood

Paper

Food Tobacco

Food Beverage & Tobacco

Textile

Manufacturing

Construction supplies

Converted Fuel

Industry

Pharmaceutical

Chemical

Primary Metals

Fabricated Metals

Electronic

Drilling Gas & Oil

Energy

Transportation equip

Primary Energy

Communication equip

-16%

-12%

-8%

-4%

0%

4%

8%

01-0

8

01-0

9

01-1

0

01-1

1

01-1

2

01-1

3

01-1

4

01-1

5

01-1

6

01-1

7

01-1

8

01-1

9

US INDUSTRY SLOWS DOWN


US: Industrial production

(year on year % change)

US: Industrial production by sector

(year on year % change)


RISING CORPORATE CREDIT RISK

CHINA

China: Coface Corporate Payment Survey

(credit terms, number of days)

Sources: Bloomberg, Coface


OPEC+ DEAL, SANCTIONS ON VENEZUELA AND IRAN & DIRTY RUSSIAN OIL

OIL PRICES : TIGHTER OIL MARKET PUSH PRICES HIGHER IN 2019

72,18

62,99

40

45

50

55

60

65

70

75

80

85

90

Ja

n-1

8

Fe

b-1

8

Ma

r-1

8

Ap

r-1

8

Ma

y-1

8

Jun-1

8

Jul-1

8

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

De

c-1

8

Ja

n-1

9

Fe

b-1

9

Ma

r-1

9

Ap

r-1

9

Ma

y-1

9

USD

Brent & WTI Oil Prices

Brent WTI

Source: Datastream

Last data point: 21/05/2019

245%

16%

132%

277%

113%

80%

150% 151% 150%

Angola Iraq Kuwait SaudiArabia

UAE Russia OPEC Non-OPEC10

Total

Compliance to 2019 output deal in April(in % of pledged cut)

Source: OPEC, IEA, Coface


MIDDLE EAST TENSIONS KEEP PRICES HIGH, WHILE DEMAND OUTLOOK WEIGH

OIL PRICES : UNSTABLE OUTLOOK

-6

-4

-2

0

2

4

6

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Co

nta

ng

o (

-) /

Bac

kwar

dat

ion

(+

)

US

Do

llars

Futures price curve in Brent crudeSix-month calendar spread (from months 1 to 7)

Backwardation (+) suggests oil traders anticipate a supply shortage, while contango (-) suggests oil traders anticipate oversupply.

Source: Datastream, Coface

Oil traders anticipate a tighter market because of growing tensions in the Middle East

But:

┃Tensions have not yet materialized into disruptions

┃Global oil demand might be weaker than oil traders anticipate and assessed

OPEC+ June / July upcoming meeting potential outcome :

┃Eliminate over-compliance with agreed cuts +0.8 million bpd vs. April 2019 output

┃Ease the agreed cuts from 1.2 million bpd to 0.9 million bpd +1.1 million bpd vs. April 2019 output

12

BUT FROM A LOW STARTING POINT

MORE BUSINESS INSOLVENCIES IN 2019

Business insolvencies:

Coface 2019 growth forecast

-16%

-9%-7% -6% -6%

-3% -3% -2% -2% -1% -1%

0% 0% 0%2% 2% 2% 3% 3% 3% 4% 4% 4% 5% 5% 5% 5% 6% 6% 6% 6% 7% 7% 8% 8% 9% 9% 9% 9%

12%

-2%

2%

-1%

3%4%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

So

uth

Ko

rea

Fin

lan

d

Bra

zil

NZ

Ice

lan

d

Ne

the

rlan

ds

Sin

gap

ore

So

uth

Afr

ica

US

A

Serb

ia

Be

lgiu

m

Ca

na

da

Jap

an

No

rwa

y

Fra

nce

Germ

an

y

Ru

ss

ia

La

tvia

Uk

rain

e

De

nm

ark

Po

rtu

ga

l

Sp

ain

Cze

ch

Rep

Slo

va

kia

Bu

lga

ria

Po

lan

d

Ta

iwa

n

Cro

ati

a

Ho

ng

Ko

ng

Ro

ma

nia

Slo

ve

nia

Ita

ly

Sw

ed

en

UK

Esto

nia

Hu

ng

ary

Lit

hu

an

ia

Au

str

alia

Po

lan

d

Tu

rkey

No

rth

Am

eri

ca

Eu

ro z

on

e

As

ia P

ac

ific

We

st.

Eu

rop

e

CE

E

2018

2019 (f)

Source: Coface


Sector Asia Central &

Eastern Europe Latin

America Middle East &

Turkey North

America Western Europe

Agri-food

Automotive

Chemical

Construction

Energy

ICT

Metals

Paper

Pharmaceuticals

Retail

Textile-Clothing

Transport

Wood

REGIONAL SECTOR RISK ASSESSMENTS


Low Risk

Medium Risk

High Risk

Very High Risk

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Business Default Risk

14

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THANK YOU FOR YOUR ATTENTION!


global 2019 sectors analysis outlook in the economic … · 6/6/2019 · 10 coface, the most agile...

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