Credit Insurer Coface Finds World Growth Rate Recovering

Evaluating the Euro Zone, Coface said it is still behind the United States with a growth forecast revised downward to 0.8 percent. The recovery in the Zone shows three different country profiles, all of which have a weak growth forecast for 2010, according to the analysis.

Canada, Australia and New Zealand–countries that export raw materials–are benefiting from the recovery in Asia, Coface said in restoring their A1 rating.

"In these countries, corporate payment behavior is back to a highly satisfactory level and bankruptcies have clearly slowed down," the firm reported.

Good performance by the American economy in the 2009 fourth quarter has led Coface to revise its growth forecast upward (to 2.3 percent) and has placed the country's "A2″ rating under positive watch, the company said.

However, Coface warned that despite some encouraging signals, such as a recovery in exports to emerging countries, the United States is still not back to its "A1″ pre-crisis rating. The firm said it fears a U.S. business slowdown during the year "due to a weakening of the favorable effects of the budget stimulus."

Industrialized countries as a whole, Coface predicted, should post 1.6 percent growth in 2010. But the company explained that this growth forecast hides some major differences, notably between the United States, which accounts for 26 percent of the world's gross domestic product, and the Euro Zone (21 percent of the world's GDP).

Fourth-quarter growth in the Euro Zone was called "disappointing, stagnating in Germany and remaining negative in Spain and Italy." Coface said it has lowered its forecast for the Zone to 0.8 percent, slightly lower than the previous forecast.

The activity in the Euro Zone was described as weakened and the recovery more limited than elsewhere. Growth profiles in the region, it was noted, traditionally differ greatly from country to country, but Coface said that "all the driving forces are struggling in 2010."

The firm said it can make a distinction between three types of countries:

o "The traditional major exporters (Germany, the Netherlands) generally rely on company investment oriented toward exports. But exports will only see a modest rebound since demand from their European partners will not be very robust.

o "France and Italy are more driven by household consumption, which will only be slightly positive due to the deterioration in the labor market.

o "Finally, in Greece and Spain, the contraction of all the components of demand will continue in 2010. The main risk in these countries is that the restrictive budget policies announced will worsen the recession."

Fran?ois David, president of Coface, said, "Emerging countries have nearly recovered their pre-crisis growth level, the United States shows a respectable but risky recovery, and the ending of the crisis is very painstaking in Europe."

Coface offers customers four business lines to fully or partly outsource trade relationship management and to finance and protect their receivables: credit insurance, factoring, ratings and business information and receivables management. The company is a subsidiary of the Boston-based Natixis mutual funds company.