According to a study by Euler Hermes on risk development in 18 economic sectors across 72 different countries in 2015, Europe is the only geographic region to offer positive results in an otherwise gloomy economic environment. Details of the study by sector and by region.
The 5 winning sectors. According to the Euler Hermes study entitled “Let the Sector games begin – Companies are having an early start at their own Olympics”, in 2015 there were 148 industry downgrades for only 76 upgrades. In this generally difficult context, five sectors fare better than others, having adapted to new macroeconomic challenges such as lasting low commodity prices and turbulence in emerging markets. These sectors are as follows:
- Automotive and car components
Also worthy of note: the IT services sector is expected to enjoy 4.3% growth in 2016 due to businesses’ increasing needs in this field (digitalisation, social networks, uberisation).
The 5 sectors in difficulty. Five sectors saw their risk level increase in 2015: metallurgy, textiles, construction, paper, and machinery & equipment. These sectors face a number of hurdles in the short term (low commodity prices, unstable demand in emerging countries, excess debt), and a series of disruptive shocks in the medium term combined with a consolidation process which they have not yet initiated. The Metallurgy sector is particularly affected given the decline in iron ore prices and a heavy debt burden. Net gearing ratios thus reach 108% in Metallurgy, and 92% in both Paper and Machinery & Equipment.
Europe, a reduced risk zone. Europe is the only region to record a slight improvement in risk profiles. Western Europe thus has more positive risk grades than negative ones in 2015 (24 upgrades versus 20 downgrades). For Central Europe, there were 22 upgrades and 30 downgrades. In Western Europe, 4 sectors have sound fundamentals with a very favourable or fairly good outlook: automotive, chemicals, pharmaceuticals and agrifood. However, according to the survey, there are no sectors with a favourable outlook in Central or Eastern Europe. Regions such as Latin America or the GCC countries, and countries such as Russia all saw sharp declines in 2015.
For the future, it will all depend on businesses’ ability to adapt to five major challenges. See the Euler Hermes video on this subject: Sector risks: 5 challenges for corporates in 2016 (duration: 2 mins 52 secs).
And to stay informed, sector by sector, of searches performed on Europages, remember to view our interactive maps! For example, take a look at the interactive map of searches in the metallurgy sector.