ANNUAL REPORT 2019
The 2020 economic outlook
'The overall global business outlook is one of moderate growth'
In 2020 growth is likely to decelerate further to 2.3%
Continuing uncertainty concerning trade policies will be compounded by the impact of the rapid spread of the coronavirus, which is already affecting global supply chains. Across emerging markets, growth is forecast to remain essentially the same as in 2019. Latin America will continue to underperform but growth is projected to strengthen, with expectations of recovery in Brazil and Mexico. Argentina’s economy is likely to contract again, but by less than in 2019.
Eastern Europe is forecast to extend its 2019 growth rate. A projected pick-up of growth in Russia and Turkey will lift overall growth in the region, although this will be undermined by lower growth in several other Eastern European countries. Asia will show the highest growth rates, although the coronavirus is exacerbating the underlying slowdown in Asia.
Advanced markets are expected to see their growth rates decline as trade measures and the effects of the coronavirus detract from economic activity. Eurozone growth will slow further in 2020 amid a challenging external environment, while US growth is forecast to moderate as fiscal policy shifts from expansionary to broadly neutral. In line with this subdued growth, business failures in advanced markets are likely to rise. However, easing monetary policy should provide some support for economic growth and corporate activity.
In the UK insolvencies are expected to rise again, although the risk of a no-deal Brexit has reduced now that the UK and the EU have reached a withdrawal agreement. However, uncertainty will persist as the two parties begin to negotiate a future trade agreement, clouding the outlook for growth. Depending on the final outcome of negotiations, the number of UK business failures could be higher than expected and this would impact other EU countries.
How does the outlook affect Atradius and our customers?
Overall, the picture for 2020 is one of moderating global growth. Economic conditions are expected to remain challenging in view of trade policy tensions and the potential impact of the coronavirus on supply chains, both affecting trade and investment. However, we expect relatively strong consumer spending to keep a recession at bay.
Balancing these factors to manage risk will be a demanding task. But, as always, we will use our expertise and the dedication of our people to work with our customers to ‘shape tomorrow together’ and guide them toward profitable trade.