Confrence conomique AFTE AU Group - Coface 15 fvrier 2017 Global - PowerPoint PPT Presentation

Conférence économique AFTE – AU Group - Coface 15 février 2017

Global Economic Outlook: it’s all about politics! Julien MARCILLY, Chief Economist

Ever higher political risk in Europe Political uncertainty in Europe Impact on GDP of a political uncertainty (EPU index, 3-months average) shock similar to the UK referendum (in pp) 800 0 0 UK 700 France Germany -0.2 -0,2 Italy Italy Spain 600 UK Europe -0.4 -0,4 Germany UK 500 Europe -0.6 -0,6 France 400 France Europe -0.8 -0,8 Germany 300 -1 -1 Spain 200 Italy -1.2 -1,2 Spain 100 Europe France -1.4 -1,4 Source: Economic Policy Uncertainty Allemagne Italie 0 Espagne Royaume-Uni 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016 -1.6 -1,6 T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T+11 T+12 T+13 T+14 T+15 Source: Economic Policy Uncertainty Source: Coface

Are financial markets becoming tired of politIcal risk? Political uncertainty & stock market Stock market volatility after a major volatility political shock (VIX, 1-month average) 400 60 Greece: First bailout plan Grèce : 1er plan de 350 (Q2 2010) sauvetage (T2 2010) Incertitudes politiques mondiales (EPU) 50 Greece: 4 th & 5 th 300 Indice VIX (éch.d.) Grèce : 4ème & 5ème austerity packages (Q3 2011) plans d'austérité (T3 2011) 250 40 Greece: A. Tsipras sworn Grèce : A.Tsipras nommé as PM (Jan. 2015) PM (Jan. 2015) 200 30 UK referendum Référendum britannique 150 (June 2016) (Juin 2016) 20 100 US election Election américaine (Nov. (Nov. 2016) 2016) 10 50 Italy’s referendum Référendum italien (Déc. (Dec. 2016) 2016) 0 0 06-00 06-03 06-06 06-09 06-12 0 10 20 30 Global political uncertainly index (EPU) VIX index (RHS) Sources: Reuters, Coface Source: Coface

Fiscal policies: 2017, a year of disappointed hopes? Japan: structural primary budget balance Eurozone: structural primary budget (change in pp) balance (change in pp) 2,0 1,5 1,0 1 0,5 0,0 0 -1,0 -0,5 -2,0 -1 -3,0 -1,5 -4,0 -2 2002 2004 2006 2008 2010 2012 2014 2016 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: OECD, Coface Sources: IMF Coface

US: will Trump manage to delay the end of the cycle? US: Corporate profits, building permits and vehicle sales Sources: Coface, BEA

Eurozone: lesser gains in in purchasing power, but greater employment Gap between structural unemployment rate Nominal and real wages and unemployment rate (%) (year on year % growth) 3,0 Inflation Real wages OECD 2,5 Forecast Nominal wages 2,0 1,5 1,0 0,5 0,0 -0,5 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 Spain UK France Germany Italy US Euro area US UK Source: OECD Sources: IMF, OECD, Consensus Forecast, Coface

France: the investment puzzle is not solved yet France: Business investment France: Business insolvencies Consommation (% sur un an) 15% 50 Investissement (% sur un an) taux d'interêt 10 ans réel (%) Incertitudes politiques (éch.d. inv.) 10% 100 5% 150 0% 200 -5% 250 -10% 300 -15% 350 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: INSEE, Ellisphere, Coface Sources: Coface, EPU, Insee, OECD, Reuters

UK: rising inflation impacts sectors in different ways UK: Impact of a 15% depreciation of the UK: Coface Sector Risk Assessments GBP (% points, REER) Low risk Medium risk High risk Very high risk Low risk Medium risk High risk Very high risk Source: Coface Source: Coface

Businesses: fewer insolvencies, but still little business creation Business insolvencies: Business creations 2017 growth forecast (%) (% change between 2015 and the pre-crisis peak) Allemagne Germany -19,8% Etats-Unis -5,1% US Italy Italie -4,1% France (2016) France (2016) -0,1% 36,5% UK 36,5% R-U -20% 0% 20% 40% Sources: National sources Sources: Coface forecast, national sources

Emerging markets: slight economic upturn in 2017 Emerging markets: 2017 Growth forecasts by sector 6 Pharma Retail 5 Chemical Services Transport Emerging markets 2017 Agro Auto Growth 4 Construction forecast Consumer 3 electronics Metals Pulp & paper 2 Textile Clothing 1 Oil & gas 0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0 0,5 1,0 1,5 2,0 2,5 2017-2016 Growth change in pp Sources: Coface, Oxford Economics

Corporate debt and banking risk go hand in hand Corporate debt to GDP ratio Banking credit condition survey (Change between Q2 2015 et Q2 2016 in pp) (below 50 = tightening) Sources: Coface, BIS Sources: IIF, Coface

China: from one bubble to another 1. Stock market 2. Capital outflows 3. Bond market 4. Real estate market (CSI 300 index) (USD bn / month ) (5-year sovereign bond yield, %) (average national price, RMB/sqm) 5 500 5,50 150 25% 5.0 5,0 0 5 000 5,00 100 4.5 4,5 0 4 500 4,50 50 0 4.0 15% 4,0 4,00 4 000 0 0 3,50 3 500 3.5 3,5 0 -50 3,00 3 000 3.0 5% 3,0 0 -100 2,50 2 500 0 2.5 2,5 -150 2,00 2 000 0 1 500 1,50 -5% -200 2.0 2,0 0 2012 2013 2014 2015 2016 20122013201420152016 2012 2013 2014 2014 2016 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2006 2009 2012 2015 2012 2013 2014 2015 2016 2006 2009 2012 2015 Sources: Bloomberg, CEIC, Coface

Coface survey: higher proportion of long overdues in China Average overdue days Overdues by sector (share of total) (longer than 150 days, share of total) 40% Textile clothing 2014 35% Construction 2015 30% 2016 Ind. machinery Retail 25% Electronics 20% Paper-wood 15% Chemicals 2014 Metals 2015 10% 2016 IT 5% Pharma Automotive 0% Less than 30-60 days 60-90 days 90-150 days more than 0% 5% 10% 15% 20% 25% 30% 30 days 150 days 2014 2015 2016 2014 2015 2016 Source: Coface Source: Coface

Social discontent + security risk = high political risk Coface political risk index for Emerging markets (100% = worst risk) Pressures Tools Security risk*** Coface Political Risk Index 70% 60% 50% 40% 30% 20% 10% 0% 20072016 20072016 20072016 20072016 20072016 20072016 20072016 20072016 20072016 RUSSIA TURKEY SAUDI INDIA CHINA MEXICO SOUTH BRAZIL POLAND ARABIA AFRICA *** The security data taken into account in 2016 are those relate to 2015. Source: Coface

Turkey: political uncertainties give the economic tempo Turkey: Real GDP growth and Turkey: Sector risk assessments net capital inflows 12 80 10 70 8 60 6 50 4 40 2 30 0 20 Croissance du PIB (en %) -2 Real GDP growth (%, LHS) Entrées de capitaux 10 Net capital inflows -4 nettes (Mds USD, éch.D.) ($ bin, RHS) -6 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* * January to October Source: Coface Sources: CBRT, Coface

Sub-saharan africa: the small fare better than the large Sub-Saharan Africa: GDP and GDP growth (%, bubble size = GDP) 2017 growth forecast Growth gap 2017-2016 Sources: Coface forecast

Global trade: better outlook in 2017, but watch out for protectionism risk Emerging countries: Exports to the United States Global trade (% of GDP) (exports, annual growth) 7% Exports excluding primary commodities (% GDP) 6% Exports primary commodities (% GDP) 5% Risk threshold = 5% 4% 3% 2% 1% 0% Average Average Q3 2016 Forecasts 2002-2007 2008-2015 Coface 2017 Source: Coface Sources: CNUCED, IMF, Coface

Country risk assessments (1) Source: Coface

Country risk assessments (2) Source: Coface

Country risk assessments (3) Source: Coface

Country risk assessments: Advanced Economies Source: Coface