Growing political risks, commodity price fluctuations and supply constraints are seen as the main factors behind the global economic slowdown that will impact international trade in 2019.
So far, the economic slowdown has been felt most quickly in Western Europe. It is predicted that in 2019, 20 out of 26 countries surveyed will see an increase in corporate insolvencies (+1.2% in the eurozone and +6.5% in Central Europe).
Another worrying phenomenon is the fact that after 8 years of linkedin data constant growth, the global automotive sector is starting to show a downward trend, mainly caused by the economic downturn and the uncertain political situation. As a result, Coface has lowered the rating for this industry to medium risk in most Western and Central and Eastern European countries, while in Latin and North American countries - to high risk.
Political risk is a serious problem in Europe
The political and economic situation are clearly correlated. The Coface Social Risk Index has reached its highest level since 2010. This phenomenon often accompanies elections. In 2019, it is worth paying attention to the vote in Greece, as well as possible early elections in Italy, Spain and Germany.
Growing social discontent and the rise of anti-European parties are becoming so significant that they could lead to a very divided European Parliament after the elections (to be held in May 2019), which could also have a negative impact on international trade .
Hence the message from Julien Marcilly, chief economist of Coface:
“For the first time since the sovereign debt crisis of 2011-2012, businesses are facing two challenges at the same time this year – the economic downturn and political risk.”