Euler Hermes, the world’s leading trade credit insurer, has downgraded a record 18 countries and 126 sector risk ratings as the Covid-19 pandemic takes its toll on the global economy.
Ireland, India and Japan are among the countries downgraded, which includes both developed and emerging economies. Major developed nations such as the UK, France and the US are being monitored closely but are yet to be downgraded as their strengthened financial foundations allow for greater ability to back businesses.
Some 60% of the 126 sector risk ratings downgraded have also moved from ‘moderate’ to ‘high risk’, highlighting the dangers the global economy faces. It marks a dramatic jump from the previous record for sector risk downgrades of 70 in Q1 2016.
Automotive and transportation are the industries most severely affected by downgrades, in 26 and 21 countries respectively, as well as a large proportion in electronics and retail. Western Europe had the highest level of sector rating downgrades, with 52.
The pharmaceuticals and software and IT sectors were the most resilient, owing to their prominence in the worldwide fight against coronavirus.
Coronavirus is the latest – and hardest-hitting – challenge faced by the global economy but Euler Hermes says trade tensions, geopolitical uncertainty and Brexit also threat major disruption in 2020.