Plaudits for South Korea, Cambodia in Coface quarterly risk updates

PARIS – The five advanced economies most likely to avoid the risk of "secular stagnation" within the next decade are Germany, South Korea, Switzerland, Belgium and the Netherlands, according to credit insurer Coface.

To identify those advanced economies at least risk of entering a prolonged period of low growth or even stagnation, Coface economists analysed 23 OECD countries based on five criteria – demographics,innovation, income inequality, public and private debt, and export performance.

Of South Korea, the only Asian country in the top five list, it said: “A leader in high-quality electronics, South Korea is achieving significant productivity gains by building on its strong innovation capacity, including a high-quality education system, a high level of public expenditure on research and development and a large number of filed patents.

Despite the slowdown in China, its cutting-edge innovative technology ensures it retains economic potential in terms of exports.”

In its quarterly update of country risk and the business environment, Coface has upgraded the country risk assessment of the Netherlands and Belgium to A2 and placed Brazil under negative watch.

“Improvements in country risk are increasingly perceptible in advanced countries, where growth is expected to rise in 2015 (+2.1%),” Coface says. “Changes vary widely in emerging countries, however (downward growth revision, to 4.2%). Brazil and Ecuador are placed under negative watch and Russia sees its business environment assessment downgraded to C.

“The upward revision in the ratings of Belgium and the Netherlands to A2 follows that of Germany, Spain, the United Kingdom and Austria in 2014 and Portugal at the start of 2015. This confirms the zone's gradual return to growth (estimated by Coface at +1.3% in 2015, after +0.9% in 2014).”

In Asia, the country risk assessment of Cambodia has been upgraded to C.

Coface says: “Cambodia continues on the road to growth. Its economic activity is robust, with GDP growth of more than 7% since 2011, supported by the tourism sector and the strength of its textile exports and privileged access to the European Union, the United States and Canada.

“Foreign direct investments continue to increase due to Chinese and Vietnamese plant relocations in the country, as well as public-private partnerships established in the context of energy infrastructure projects.”  www.coface.com (ATI).