G-Grade Q4 2019

New trends in country risks: AU G-Grade Q4 2019

The G-Grade’s purpose is to review changes in country risk and the tool has monitored events and tracked the following changes in Q4 2019:

Main upgrades

– (+0.50) Ukraine: The election of the new president and his party’s majority in parliament provides reason to be optimistic about the future. The recently appointed government has shown a willingness to implement reforms. According to IMF, over the past 4 years the government gross debt has dropped by 24pts from 81% in 2016 to 57% in 2019.

– (+0.50) Macedonia’s rating has been upgraded during the last quarter thanks to the overall economic environment. GDP growth was 2.7% in 2018 and is expected to reach 3.2% in 2019 with 3.4% in 2020.

 

Main downgrades

– (-0.75) Hong Kong has been in recession for two quarters and the country is suffering from both internal and external pressures (civil protests and the trade war between US & China). Continuing demonstrations have a direct impact on retail, tourism and transport and domestic demand suffers accordingly. Despite its vulnerability to trade dependence with China (55% for exports and 45% for imports according to Euler Hermes), Hong Kong’s external position remains very solid.

– (-0.75) Tunisia’s economic position continues to be a concern as liquidity reserves are impacted by the current account balance level (-10.2% in 2017, -11.1% in 2018 and -10.4% in 2019 according to IMF). The government’s debt level is expected to rise from 62% in 2016 to 79% in 2020 – (IMF forecasts).

– (-0.50) Argentina now has a new president – Alberto Fernandez, but his task will be tough especially because the level of government debt has almost doubled during his predecessor’s term (53% of GDP in 2016 and expected to reach 93.3% of GDP at the end of 2019). During the same period, unemployment rose from 8.5% to 10.6% and inflation increased from an index of 168.3 in 2015 to 438.5 in 2019.

– (-0.50) Cameroon’s level of liquidity remains low and the country depends on the support of the IMF (and others). The current account balance was negative in 2018 (-3.7%) and the level is expected to be the same in 2019.

– (-0.50) Haiti is paralysed by the demonstrations against corruption and the current government. Fundamentals of the country are still very weak after the misery and the earthquake of 2010.

– (-0.50) Saudi Arabia GDP growth was 2.4% in 2018 and is supposed to dive to 0.2 % in 2019, mainly due to an oil industry slowdown.

 

 

Download the G-Grade Q4 2019 here