From excessive pessimism to excessive optimism – Coface Barometer Q4 2022

Hong Kong S.A.R – Media OutReach – 14 February 2023 – The year 2023 starts with good news on the macroeconomic front. First, Europe has avoided a recession that looked long promised. Efficiency gains and the slowdown in activity have led to a sharp drop in energy prices and thus a welcome slowdown in inflation. Finally, the prospect of a rebound in China in the second half of the year, albeit very uncertain, also raises hopes for the global economy. This was enough for the financial markets to go wild, reassured by the fact that the worst-case scenario is for the time being, at bay.

While we fundamentally concur, we must be careful not to become complacent. The challenges facing the global economy last year remain relevant and the multidimensional crisis we are experiencing is not about to disappear: geopolitical fragmentation, the energy crisis, climate change, epidemic risks… The transformation of the world is accelerating and generating risks that could derail the best-crafted scenarios.

In this context, Coface’s risk assessments have changed only slightly, with 5 changes for country risks and 16 changes for sector risks. In net terms, the trend remains towards downgrades.

Recession retreats, stagflation takes hold

2022 ended on a positive economic note. Mild temperatures and substantial gas reserves have removed the specter of forced rationing for Europe this winter and European economies should thus avoid a sharp contraction in activity. This has led Coface to keep its global growth forecast for 2023 unchanged at 1.9%. Our scenario of stagflation in the advanced economies and the overall resilience of the emerging countries has also been confirmed.