New trends in country risks: AU G-Grade Q4 2020
We are pleased to publish this last G-Grade of the year. 2020 has been an extraordinary year from an economic point of view and never before have statistical forecasts been subject to so much uncertainty. No one is able to say today what will be the medium- to long-term impact of the health crisis. But thanks to the G-Grade, which is a synthesis of the country risk analysis of 4 credit insurers (which all have radically different DNAs), we can provide you with a very relevant indicator to better understand your export risk. “Relevant” because the truth is somewhere in the middle of the analysis by Atradius, Coface, Credendo and Euler Hermes, and in such a troubled time we need tools to manage the risk in the best possible way.
This quarter the main variations in the G-Grade (of more than 0.5pts) are all down.
– Jordan (-1.00): the G-Grade fell from 6.50 to 7.50; the country was hit hard by Covid 19 and the economy plunged into recession with a sharp decline in GDP in 2020 (-5% according to the IMF), while GDP per capita fell sharply from $4426 to $4174. Public debt, for its part, increased by 10 points between 2019 and 2020.
– Lebanon (-0.75): Rarely has a country gone through so many traumas simultaneously – sovereign default, economic policy failures, political crisis, two explosions that destroyed Beirut’s city centre and blocked trade at the port (the country’s main source of supply), resignation of the government, etc. It will take a long time for the country to recover.
– Turkey (-0.75): the G-Grade falls from 6.75 to 7.50 reflecting the impact of Covid 19 on the economy (GDP will reach -5% in 2020 according to the IMF), the purchasing power of the Turks fell drastically with a GDP per capita which reduced from $9,151 in 2019 to $7,715 in 2020. Despite the measures taken by the government, the depreciation of the lira (TRY) remains a major problem. In addition, Erdogan’s very aggressive foreign policy with the surrounding countries (Armenia, Greece, Russia, Syria) creates a significant political risk and extremely high latent instability.
The other countries that see their scores fall are Ghana (from 6.00 to 6.50), South Korea (from 2.25 to 2.75), Oman (from 6.25 to 6.75), Taiwan (from 2.25 to 2.75), United Arab Emirates (from 3.25 to 3.75).
The next G-Grade will be based on country risk data as of 31/12/2020 and will be released at the end of January 2021.