The economic outlook
'The overall business outlook for Europe is weakening as global trade slows'
Slower global growth, but still solid.
Across emerging markets, growth is forecast to decline slightly. In Latin America, it is expected to increase, mainly on the back of a higher growth rate in Brazil. Argentina’s economy should recover in the course of 2019, but will stay in negative territory due to policy tightening. In Mexico, replacing NAFTA with the US-Mexico-Canada Agreement (USMCA) has brought some certainty, but recent policy decisions made by the Mexican government are clouding the outlook. In Eastern Europe, growth may moderate slightly, with Turkey expected to enter recession in
2019. Asia will continue to drive global growth, but the Chinese slowdown will have an impact.
Advanced markets may see their growth rate decline due to trade measures and contractionary monetary policies. Eurozone growth is expected to moderate in 2019 as stronger imports weigh on the growth contribution of net trade, and due to negative spill-overs of Brexit uncertainty. US growth is also forecast to moderate, due to monetary tightening by the Federal Reserve and the unwinding of the fiscal stimulus.
Tighter financial conditions are expected for advanced markets as a whole, though the business environment remains more accommodative compared to emerging markets. The decline in insolvencies for advanced markets will end in 2019. The UK is expected to see another year of rising insolvencies, as Brexit-related uncertainty clouds the growth outlook. The number of UK business failures could increase if a no-deal Brexit or postponement prolongs the uncertainty. This would also affect other EU countries negatively.
How does the outlook affect Atradius and our customers?
Overall, economic conditions in 2019 are expected to be more challenging than in 2018. But we are well prepared, and our customers can be confident we have the underwriting knowledge and skills to steer them away from risks and towards opportunities.