SACE (CDP Group) publishes the new edition of the Risk Map and presents the scenario for those who export and invest abroad in the Focus On "2017 Risk Map: more uncertainty in the era of each for himself".
The picture outlined by this year's Map is that of a divided world, characterized by a strong rethinking of globalization and the resurgence of protectionist policies, as well as a growing dichotomy between advanced and emerging markets, particularly marked by high levels of debt, currency tensions and geopolitical instability.
In this context, however, a rational approach and a strategic vision must be maintained: exports and internationalization do not seem destined to resize, but will however have to make use of more advanced tools and find new directions for development.
The new era of each for himself: towards a more evolved approach to internationalisation
“Protectionism is dangerously making a comeback and expectations for this year are not rosy – explains Beniamino Quintieri, President of SACE – Experience teaches, however, that in the medium-long term the effects of trade barriers tend to turn out to be a boomerang for the countries that introduce them, and this is even more true in a world where global value chains are, due to the growing importance of imports of intermediate products, a determining factor of competitiveness. Growing abroad is still possible, but a qualitative leap in risk knowledge and insurance is needed”.
2016 marked a peak in the protectionist measures adopted by various countries around the world: since the outbreak of the global financial crisis, the high barriers have risen to over 3.500; almost a quarter of these impose the obligation to have at least a certain percentage of a product or service made in the country, especially for electronic products and vehicles. These are measures chosen in particular by the G20 countries, starting with the United States – the third destination market for Italian exports – which have introduced a protectionist measure every four days.
The ten sectors most affected by protectionism account for almost 41% of world trade, which has inevitably suffered a contraction: from 2008 to 2016 it grew at an average annual rate of 2,9%, well below the 7,3% achieved in the previous period (2000-2007).
Observing the risk trend by geographic area, the overall picture presented by the SACE Map is made up of many shadows and some light: not surprisingly, risks are increasing in the Middle East and North Africa, in Latin America and in Sub-Saharan Africa, but improving the riskiness of advanced countries and the Commonwealth of Independent States (where the stabilization of Russia stands out) and Asia (with good performances, net of particular caveats, in heterogeneous markets such as South Korea, Pakistan and Myanmar) remain stable.
Faced with markets inclined to adopt measures to limit international trade, there is no shortage of areas going against the trend, which can become ecosystems to explore: the Andean countries (Colombia, Peru, Chile), the Sub-Saharan area and Asia represented in 2015 over 27 billion euros of Italian exports, more than double that of China and India combined.
Risk trends 2017: the phenomena under observation
The SACE study highlights three trends that will influence global risks and opportunities in 2017:
– Increase in debt. Global debt, which in 2016 came to represent 325% of world GDP, will also be confirmed for the current year as one of the most worrying risk trends. The phenomenon is mainly fueled by the public component in advanced markets and by the private component in various emerging countries, such as Brazil, Mexico, India, Egypt, Turkey, Mozambique, Nigeria and Angola, with particularly strong consequences on the risk levels of banking counterparties. China deserves a separate discussion, where the impressive private debt and that of local authorities and state-owned companies reaches 240% of GDP.
– Currency tensions. The increase in risks in emerging markets led to a substantial outflow of capital, with a consequent restriction of foreign exchange reserves and the credit and capital markets. Several emerging countries have launched containment measures which have translated into an increase in the risk of non-transfer of currency for foreign operators: some commodity exporting countries (such as Nigeria, Mongolia, Tajikistan) have made it more difficult to access hard currency from part of the local operators. Other countries (such as Angola, Greece, Ukraine), due to a persistent shortage of hard currency, have introduced or tightened restrictive measures on payments in dollars/euros. Positive trends, on the other hand, are recorded in markets such as India, but also Iran, Argentina, Ghana and Tunisia, which despite presenting non-negligible risk profiles, consistently improve compared to 2016 as regards transfer and convertibility risks. Also in this case, China is confirmed as unique: while maintaining a substantially low risk, following the 7% loss of the renminbi against the dollar in 2016, it has begun to establish mechanisms to curb the fall of the currency and the loss of foreign exchange reserves, which fell from 4 to 3 trillion in two years.
– Geopolitical instability. After a year marked by extraordinary events, strong discontinuity and violence on the rise globally, 2017 also opens under the banner of uncertainty and volatility, with various innovations that will further reveal their effects in the year that has just begun: the Trump's election, his trade policy choices and partner countermeasures; the start of Brexit and the persistence of uncertainty in Europe and, above all, the radicalization of the political conflict in areas at risk. A picture of instability which, in addition to the countries already known for the severity of the violence in progress (primarily the Middle East and Africa), has seen several nations undergo a rapid worsening of the reference context.
Exporting and investing in a more risky world
The mix of opportunities is changing 2017 therefore opened under the banner of new challenges that make it necessary to re-calibrate foreign development strategies for those who export and invest in the world. On the one hand, the markets with the greatest potential for Made in Italy exports and investments will continue to be such in the medium to long term. Despite the current worsening of risk profiles, this is true for Brazil, for Turkey and for a large number of emerging partners, with high indexes of opportunities, which will have to be faced with more advanced strategies, which include the systematic use of insurance-financial tools to protect and support the business, such as those made available by SACE and SIMEST, united in the Italian pole for export and internationalisation. On the other hand, there is no shortage of areas in contrast with the general picture which can be a first frontier for new exporters as well as areas of consolidation for operators already present in riskier areas: in addition to advanced markets, there are, for example, the Andean countries ( Colombia, Peru, Chile), some more integrated markets within the Sub-Saharan area (from East to West Africa) and Asian realities highly projected towards global trade such as South Korea.
Attachments: Export: Sace's Risk Map
