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COFACE: Every Country Has Its Own Risk by Milena Radoman

Political instability, corruption, expropriation, as well as extreme climatic conditions and health
risks… The notion of country risk has become essential in the context of globalization.
XEFI MONACO
What is the liquidity and solvency of a country? than 3% this year, will probably be below and availability of resources, growth is de
Is its governance good or corrupt? How 2% in 2023. It will only come from emerging facto limited too, recalls the chief economist. Le Millefiori - 1 rue des Genêts - 98000 MONACO
effective are its courts for debt settlement? countries; Europe having entered recession If we want to meet the climate objective
Here are the questions that a company asks while the United States and Japan will record of a temperature rise of less than 2°C, +377 92 00 00 85
itself when it wishes to invest in or export to very weak growth” we must activate all levers: efficiency,
a country. This is why many organizations Beyond the energy crisis, the objective of decarbonization, CO storage, and we must
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such as COFACE calculate the country risk. carbon neutrality is significant in the long therefore add austerity measures. It should
COFACE guarantees debts arising from sales term. “If there is no energy, there is no also be remembered that in most transition
by French exporters to foreign buyers and growth. And the exploitation of hydrocarbon scenarios, net CO emissions will be negative
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covers the risks run by exporters. Today it resources being limited, for climatic reasons after 2050.”
offers an assessment of 162 countries on
a scale of 8 levels: A1, A2, A3, A4, B, C, D, E. VENTE DE MATÉRIEL
“The assessment is based on macroeconomic Monaco, an A3 country risk
criteria (economic and social risk, political, Although Monaco does not appear in
banking, financial, and environmental) as Coface’s quarterly barometer – in the
well as microeconomic. Our model compiles same way as other micro-States - the
a lot of reliable data (IMF, central banks, country’s risk is nevertheless well and
markets, World Bank) to which internal data truly calculated. “The Principality’s MAINTENANCE & INFOGÉRANCE
on the payment behaviour, company failures assessment benchmark is France,
etc. are added”, explains Jean-Christophe because the two countries’ territories
Caffet, chief economist at Coface, recalling are intertwined. In Monaco, economic
that global warming is increasingly taken data is limited. There are very few
into account. “Environmental risk takes surveys on household and business INTERNET & SÉCURITÉ
into account both physical risks (pollution, confidence, for example, as well
as real-time statistics…” explains
floods, etc.) and transition risks (quality of Bruno de Moura Fernandes, Head of
the solutions implemented, introduction of Macroeconomics at Coface. While
new regulations, etc.).” specifying that «Monaco’s assessment
remains autonomous». Clearly, if
The War in Ukraine: 19 Countries’ Ratings France has a public debt problem, SOLUTIONS SOFTWARE
Decrease the Principality’s rating, where
Coface lowered the assessment of 19 public finances are healthy and the
countries in its barometer for the second constitutional reserve fund solid, will
quarter of 2022, including 16 in Europe – not automatically be downgraded. © COFACE
notably Germany, Spain, France and the Result: “The assessment of Monaco, SOLUTIONS PRINT
United Kingdom - due to the geopolitical which was A2, was downgraded to A3 Bruno de Moura Fernandes, responsable de la macroéconomie
context, the increase in inflation and interest like France, Germany, Belgium, Spain Head of Macroeconomics
rates and the energy crisis. So what’s the and Austria, due to the impact of
explanation? “The war is exacerbating tension the Russian-Ukrainian conflict on Russian tourism and real estate sales for example.
on a productive system already seriously Construction is very important in Monaco and represents 13% of GDP. It is a risky sector
damaged by two years of the pandemic, when interest rates rise. On the other hand, the prices of metals, which are important HÉBERGEMENT & SAUVEGARDE
and heightens the risk of a hard landing in construction, soared at the start of the war but fell back this summer. As Russia
is one of the main producers of metals, it was feared that there would not be enough
for the global economy. “The situation is metals to go round. However, the real estate crisis in China has changed the situation.
quite worrying” explains Jean-Christophe China, which accounts for 60% of global steel demand, has in fact recorded a marked
Caffet. “We are witnessing a simultaneous slowdown in its activity,” says the economist.
slowdown in all countries. We are in a
stagflation scenario on a global scale: the On the microeconomic side, rated companies in Monaco include subsidiaries of the
zero-tolerance covid strategy in China is cosmetics group Coty and Lancaster, pharmaceutical laboratories, as well as stakeholders
in oil trading (Dan-Bunkering) and construction (Richelmi).
continuing to disrupt global production Retrouvez-nous sur
chains. Global growth, which will be less
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