A quarter might seem to be a short period of time, but it’s long enough for an economic and political situation to change completely. Our quarterly edition of the G-Grade as of Q3/2015, highlights these significant changes in the evolution of political risk globally. As a reminder, the G-Grade aims at providing a condensed view of the political risk assessment done by Atradius, Coface, Credimundi and Euler Hermes allowing you to control your credit risk export sales in more than 140 countries.
Since the previous edition, fifteen countries have had a significant improvement or deterioration in their rating. The top 3 changes are as follows :
– Greece – Greece’s grade dropped from 6.25 to 8.25. Increased capital control measures, difficulties in accessing funding and overall contraction in demand all indicate a probable rise in business failures.
– Brazil – A few years ago the label “BRIC” (acronym for the economies of Brazil, Russia, India and China = “high-growth” countries ) was very applicable to Brazil. Today, however, it cannot be compared to India or China anymore. The recession is obvious, household consumption is constrained by high inflation, and the political context is very tense with action plans not showing solid results and public finances deteriorating. Its rating slides from 4 to 5 over the third quarter of the year.
– Cambodia – On the other hand, Cambodia’s assessment shows the most improvement in the quarter. Their score moves from 8.25 to 6.75, reflecting several positive signals. These include stable growth of around 7% over the last 4 years, a lull on the political scene, and an economy very aligned to the US, their largest trading partner. As the US recovery continues, Cambodia’s exports to this country should increase. Nevertheless, it is important to keep in mind that Cambodia is still fragile and the country remains dependent on foreign aid.