Brexit, trade war and social unrest
In presentations and panel discussions, it quickly became clear that the coming years are going to be challenging. The softening of the global economy is underway. This is partly due to the Brexit, looming trade wars, social unrest in many countries and immigration issues. The high-risk countries of 2019 include the UK, Italy, Turkey and Argentina. China's growth is also declining sharply, directly affecting international trade and the global economy. Remarkably, car sales, which reached all-time highs in recent years, are actually declining dramatically in China. Moreover, household debt is rising sharply in China. The first signs of the cyclical economic downturn are clear. These will shape the picture in the coming years. How long this period will last is difficult to predict, although it is unlikely that the impact will be as great as in 2008/2009.
Arming against rising export risks
Looking at the Netherlands' current risk assessment, we are among the top five countries in the world with A1 status (as per Coface risk assessment). Gross domestic product growth is weakening to 2.2% in 2019 from 2.7% in 2018. Inflation is slowly rising to 2.4% from 1.6% and public debt has been declining sharply since 2016. Unemployment is still very low compared to many European countries. Looking at the number of bankruptcies, it is expected to increase again after years of decline.
All in all, the Netherlands seems to have a solid basis for coping with the economic downturn. But because Dutch companies export a lot, it is important to monitor economic developments in different countries closely. The number of non-payments and bankruptcies will rise sharply worldwide. So check carefully with whom you do business. Credit insurance is no luxury. Should your debtors unexpectedly fail to pay, you have a safety net to absorb these losses.
Would you like to know more about how to guard against the weakening of the global economy in general or specifically in high-risk countries? Then contact us at info@xolv.nl or 073 - 820 02 95. Our specialists will be happy to talk to you.
