Publications

The economy shows high growth rates of more than 5% p.a., but high household debt could become an issue should interest rates increase substantially.

GDP growth is expected to remain at above 6% in 2018, but controversial economic policies could hamper business sentiment and foreign investment.

In 2018 the economic performance will be impacted by weaker demand from China and lower domestic demand due to weaker residential construction activity.

The high level of household debt remains a downside risk for the economy, together with a tougher competition from China in a range of industries.

Growing competition from mainland China in the electronics sector require productivity increases and a diversification of the economy in the long-term.

The Thai economy is forecast to grow by 3.8% in 2018, supported by public investments in infrastructure, rising household consumption and exports.

High GDP growth of more than 6% in expected in 2018 driven by domestic demand and exports, but the economic fundamentals still show some weaknesses.

The global economy is in a sweet spot of broad-based economic growth and low interest rates, but we expect this to be bottoming out in 2018.

Despite higher prices, debt levels continue to rise in many energy exporters. Now is no time for complacency.

Improvements in business performance and credit risk seen in 2017 and the stable outlook for 2018 have led to a performance rating upgrade to “Fair”.

The sector still suffers from fierce competition with prices and profitability at a low level, while major players keep putting pressure on subcontractors.

Tight lending conditions set by banks still hamper sector performance, exacerbating the fact that many construction businesses remain highly geared.

Brexit will undoubtedly impact on the construction market in the coming years, as the industry is very susceptible to shifts in investor confidence.

Banks remain rather cautious in providing loans to the industry due to the large number of insolvencies and generally volatile market demand situation.

Construction expansion is set to continue, underpinned by robust economic growth, with building businesses profit margins expected to remain stable.

The profit and loss accounts of businesses active in energy-intensive segments (e.g. cement) are negatively affected by elevated electricity and gas costs.

While mining-related activity could decline further the prospects for growth in other parts of engineering and non-residential construction are improving.

Payments take 60-120 days on average and the payment behaviour has been rather bad over the past two years, with a high level of protracted payments.

The outlook for 2018 remains subdued and the already low profit margins of many construction businesses are expected to deteriorate further in H1 of 2018.

While the market is still growing, increasing costs for construction materials and transport weigh on the performance of construction businesses.

Smaller contractors continue to suffer from tight cash flow and deteriorating margins due to a lack of projects and higher labour and rental costs.

Construction is expected to have high growth rates over the next five years, mainly due to large infrastructure projects driven by the government.

Canada's GDP growth is forecast to slow down to about 2% in 2018, due to a slowdown in private consumption and government spending.

Costa Rica’s GDP growth is expected to accelerate driven by private consumption, robust private, public and foreign investment, and further export growth.

Mexico seems to be quite resilient in dealing with the uncertainty brought by the NAFTA renegotiations due to its strong economic fundamentals.

Panama´s economy is small, very open, highly diversified, fully dollarized and highly competitive by regional standards. However, challenges remain.

The US administration´s trade policy remains a downside risk, not just for trading partners, but also for the US economy itself.

The economic recovery in emerging market economies is expected to continue strengthening in 2018 and these markets could present opportunities for business.

Due tot the inability to absorb higher input costs and increased pressure on margins, both payment delays and insolvencies have increased in 2017.

The outlook for the Brazilian food sector is benign, due to an ongoing economic rebound and robust demand from China as largest food export market.

Commodity price increases have added pressure on many food manufacturers, stuck between farmers demanding higher prices and powerful retail chains.

Average payment duration in the food sector is 40 days, and the amount of payment delays and insolvencies remains low compared to other Dutch industries.

As food processors and retailers demand longer payment terms from their suppliers, a wave of longer payment terms is being created along the supply chain.

The outlook for food exports remains positive, with further demand growth from overseas expected, due to the strong reputation of “Made in Italy” food.

Key challenges for food retailers are the increasingly competitive market environment and the very high wage pressure, which is diminishing profit margins.

A hard Brexit remains a major threat to the Irish food sector, despite ongoing efforts of food exporters to diversify shipments away from Britain.

The recent profit margin increase is expected to bottom out in the coming months due to a slowdown in inflation and increasing competition in food retail.

The average payment duration in the food industry is 60 days, and the number of payment delays remained low in 2017, with no increase expected in 2018.

Global economic momentum, which began picking up in H2 of 2016, has solidified through the year. However, now is not a time for complacency.

Overcapacity remains the main challenge, as the rebalancing of the economy from investment and export-driven growth towards private consumption continues.

The steel and metals sector remains resilient for the time being, but the market environment is turning increasingly difficult with more downside risks.

Demand from construction and automotive as key buyer sectors has been robust in 2017, and steel price increases have been pushed through the supply chain.

While in general insolvencies are not expected to rise sharply, an increase in business failures in Puerto Rico and the Houston area cannot be ruled out.

Both the rebound of steel and metals prices and increased domestic demand have helped to improve margins in 2017, which nevertheless remain tight.

Export orientation and diversification are key factors for business success in a business environment characterised by overcapacity and volatile prices.

Due to a high non-performing assets level banks remain reluctant to provide loans, and external financing at competitive conditions remains a challenge.

While the profit margin development is generally stable competition remains high with Asian steel and metals businesses on international markets.

While the outlook for late 2017 and 2018 remains positive, due to overcapacity there is on-going price pressure in most segments, affecting margins.

Production has increased again in 2017, but competitiveness of the domestic steel and metals industry remains negatively impacted by high power costs.

Payment experience has been good over the past two years, and steel and metals insolvencies decreased in 2016, with a stable outlook for 2017 and 2018.