Money Buzz! Europa

Category: Economy

  • Study: French nationality remains the best in the world

    Study: French nationality remains the best in the world

    French nationality has once again been ranked as the best in the world, while for citizens of the UK, the ramifications of a “hard” Brexit could well sink the quality of their nationality from 8th globally, to 56th (the current position of China).

    Money Buzz! Europa learned this data from the latest findings of the Kälin and Kochenov’s Quality of Nationality Index (QNI), which is the only ranking that objectively measures and ranks all the world’s nationalities as legal statuses.

    Holding the top spot for eight consecutive years, France earned a score of 83.5% out of a possible 100% — less than one percentage point ahead of Germany and the Netherlands, which sit in joint-2nd place with 82.8%. France’s comparative advantage lies in its greater settlement freedom (attributable mainly to the country’s former colonial empire).

    In the top 10 on this year’s index, Denmark finds itself in 3rd place with a score of 81.7%, while Norway and Sweden hold joint-4th spot with 81.5%. Positions 5-10 are held by Iceland, Finland, Italy, the UK, Ireland and Spain, in that order.

    The US occupies 25th place on the QNI with a score of 70.0% — the country’s relatively poor standing is primarily due to its low settlement freedom compared to EU member states. 

    China ranks 56th, a four-place improvement on last year, and the Russian Federation climbs up two positions to 62nd place. The UAE has attained its highest rank ever, securing 42nd place. The bottom three nationalities on this year’s QNI are South Sudan, Afghanistan and Somalia.

  • Ranked: Highest earning sports teams on TikTok

    Ranked: Highest earning sports teams on TikTok

    Spanish soccer giants F.C. Barcelona benefit the most from any advertising/promotional TikTok opportunities at astonishing £671/€779/$879 per post, Money Buzz! learned from a study published by GolfSupport.com.

    Thereafter, European champions Liverpool F.C. have the potential to gain £398/€463/$522 from an advertising/promotional post on TikTok.

    Basketball powerhouse Golden State Warriors can make a healthy £397/€462/$521 from advertising/promoting a product or service on their profile.

    Six-time Super Bowl winners Pittsburgh Steelers can on average earn £117/€136/$153 for any advertising/promotional uploads on TikTok.

    Interestingly, Chicago Cubs lead the way when it comes to major league baseball (MLB) clubs. The three-time world series conquers can expect to see an average of £28.00/€33.00/$37.00 for any advertising/promotional activities.

    On the other end, Atlanta Falcons (NFL) alongside Brooklyn Nets (NBA) equally have the lowest earning prospects on TikTok. Each team will only receive a mere £5.00/€5.00/$6.00 per post advertising/promoting a product or service.

  • Romania, 7th place in CEE after the number of companies targeted by tax inspections

    Romania, 7th place in CEE after the number of companies targeted by tax inspections

    Over 22% of companies in Romania were targeted by tax inspections in 2018, almost three times higher than in 2017 or 2016, but below the average in Central and Eastern Europe of 32%, according to a survey of PwC Tax Controversy & Dispute Resolution (TCDR) network in Central and Eastern Europe.

    Thus, Romania ranks 7th in the region, the first places being occupied by Bosnia and Herzegovina (63%), Bulgaria (48%), Poland (48%) and the Czech Republic (35%). Both in Romania and in the other Central and Eastern European countries, most tax inspections concerned the corporate income tax and the VAT. In Romania, the inspections verified in 45% of cases aspects of the corporate income tax, above the regional average of 34%, and 36% targeted the VAT, compared with 27% at the CEE level.

    “In this survey, we aimed to identify local trends in tax inspections area compared to those in other states in the region as we find it extremely important to observe how this important component of tax administration evolves in our region. Although there are some differences from the perspective of the fiscal, administrative and judicial systems, the countries in this region have enough commonalities in the practical evolution, during the last 30 years, and the results are extremely interesting”, said Dan Dascălu, Partner D&B David and Baias, leader of the PwC TCDR network in CEE.

    The survey shows that 40% of the tax inspections in Romania were completed in no more than 3 months, compared to 47% in the region. States that have reported comparable periods include Bosnia and Herzegovina, Latvia and Lithuania.

    “We found that the inspectors’ approaches are similar in most countries, the areas of interest being the same. For example, in the case of corporate income tax, the most frequently verified issues are related to intra-group transactions, services deductibility and transfer pricing, and in the case of VAT, the most common cases refer to deductions. Also, the duration of the inspections, as well as their implications, including from the perspective of challenging the tax documents, have many points in common, which can be a starting point in the ANAF – taxpayers dialogue, in order to improve the relationship between them, including by relating to other CEE states experiences”, explained Dan Dascălu.

    Regarding the additional liabilities assessed by tax inspection authorities, in most of the cases the amounts were up to EUR 100,000, respectively 43% of the respondents in Romania and 51% in Central and Eastern Europe. At the other extreme, the survey highlighted that 18% of inspections led to taxation between EUR 1 million and EUR 5 million in Romania, compared with the European average of 5%.

    Over half of the respondents in Romania (55%) choose not to object against the taxing acts issued following tax inspections, in CEE the percentage being 62%.

    The main reasons for the respondents not to object against the conclusions of the tax inspection was the acceptance of the tax inspection findings, the small number of findings and distrust in the effectiveness of the challenge.

    Where businesses objected against the tax inspection findings, in 37% of the cases the appeal was totally rejected in Romania and 42% in CEE, while 28% of the Romanian companies obtained a fully or partly successful solution, compared to an average of 38% in the region.

  • General slowdown in the global economy despite central banks’ actions

    General slowdown in the global economy despite central banks’ actions

    With business morale being affected by a summer marked by a multiplication of areas of political uncertainty around the world, it seems likely that 2020 will be a year of economic decline.

    The Argentine currency crisis, major demonstrations in Hong Kong and Russia, Brexit, the attack on oil installations in Saudi Arabia – these are just some of the many events that marked the third quarter of 2019.

    Increasing political uncertainty, combined with the decline in the volume of world trade, the high volatility of oil prices, and the decline in automobile sales in Europe and China, has continued to affect corporate morale.

    Will manufacturing companies’ pessimism of spread to the rest of the economy?

    Today, in addition to European and Asian companies, American companies are also openly concerned about President Trump’s protectionist rhetoric. Although the Sino-American trade war seems to be moving towards a trade agreement between the two major global powers, the US President’s actions in the context of a campaign for re-election and an impeachment procedure remain difficult to predict.

    In addition, there are ongoing structural changes in the automotive sector, including emission standards in Europe and changes in consumer behavior in China. In this context, European economies are currently evolving at two speeds: some are particularly dependent on global industry and trade (Germany) and/or penalized by internal political uncertainties (Italy, United Kingdom), whereas the French, Spanish and Dutch economies seem more resilient.

    Central banks swing into action

    Central banks in the United States, the eurozone, and many emerging countries have taken stock of the situation. Indeed, as a result of the sharp slowdown in growth, many central banks have announced monetary easing measures.

    The effects of monetary policies that set negative nominal interest rates are uncertain. Negative policy rates can stimulate the economy with a boost to households and businesses, but they can also erode bank profitability. However, in theory, the positive effect on activity prevails. The expected impact of recent monetary easing measures, particularly in the eurozone, should therefore be real, even if these ultra-expansionist monetary policies have not allowed inflation to approach the target set recently by the countries that have taken this approach.

    Overall, due to this widespread political instability, Coface anticipates that 2020 will be marked by an economic slowdown, while continuing to detect many positive signals indicating that a wake-up call is happening, and that governments and central banks are mobilized to face it.

    In this context, two changes in country evaluations have taken place this quarter: Hong Kong (downgraded from A2 to A3) and Mauritania (upgraded from D to C). On a sector basis, after the series of downgrades in the automotive sector in June, there were fewer changes this quarter – but risks have still increased (13 downgrades but no upgrade), notably in the automotive sector (downgraded in three new countries) and in sectors depending on it (e.g. chemicals in Germany). Corporate credit risks are also on the rise in the paper sector in North America. Finally, there are new victims of the rise of trade protectionism (ICT sector in Korea)

  • In case of a hard Brexit, there could be pressures on office buildings in Bucharest

    In case of a hard Brexit, there could be pressures on office buildings in Bucharest

    In case of a hard Brexit, just a modest 10% decrease in trade flows with the UK would shave around 0.1% of Romania’s GDP and bring potential pressures on good office buildings, as among companies tied to the UK economy are blue-chip tenants, according to data from the real estate consultancy company Colliers International Romania.

    The UK is Romania’s 4th biggest service export destination, after Germany, Italy and France, with around 8% of total, though it also generates nearly 12% of the IT service exports, underscoring the deep ties to the office market in Bucharest and other parts of the country.

    A “business-as-usual” context remains the main scenario for economic life after Brexit, but it is important to understand the deep economic ties between CEE and the UK, particularly if the worse comes to pass. Furthermore, global value chains have only gotten closer intertwined in recent years.

    Brexit process would risk disrupting CEE’s high value-add services exports

    Under an adverse scenario, the Brexit process would risk disrupting one of the CEE’s main economic staples: its high value-add services exports. Romania has seen export services to the UK more than double in the recovery phase after the crisis, outpacing by a wide margin the average growth rate. Several significant British companies operate service centers out of Bucharest (like the London Stock Exchange or British American Tobacco’s global service center), while other big international names dedicate a large part of their activity to UK partners.

    “The longer the Brexit process drags on, the longer uncertainties will linger, so companies on both sides of the table – continental Europe and the UK – may want to hedge a bit their future. We believe that it is unlikely that companies in the UK will move a huge chunk of their workforce, particularly after Brexit, in the EU or Romania (several hundreds or above), rather they may want to establish a small foothold in Europe, with CEE economies potentially serving as prime destinations due to their good mix of labour costs and skills, as well as cheaper office spaces”, Sebastian Dragomir, Head of Office Advisory at Colliers, said.

    The UK is in the top destinations for service exports for CEE countries, including very high value-added services in business services or IT&C. This suggest that a negative effect on such trade flows may be more than what seems at face value for Eastern European countries.

    (countries’ exports to the UK, share of total) Romania CEE-6 EU-27
    Total services 8.2% 7.3% 9.1%
    Travel services 17.0% 4.9% 9.3%
    IT&C services 11.5% 12.1% 10.2%
    Other business services 8.2% 10.1% 9.2%

    Source: Eurostat, Colliers International Romania

    “A simple estimation suggests that just a 10% decrease in Romania-UK trade flows would knock off some 0.1% of the GDP over the short term. Still, effects may be stronger than this suggests, as the country is the biggest overall source of external surplus via the trade channel (so quite negative for the RON); for real estate, companies tied to the UK economy are among the blue-chip tenants in Romania’s office buildings, meaning potential pressures on good buildings”, Silviu Pop, Head of Research at Colliers, concluded.

    Overall, Romania’s modern office market remains robust and could set a record this year based on gross take-up; after increasing some 18% in the first three quarters of 2019, total demand on the Bucharest office market reached around 263,000 sqm, which means the full year figure could print above the previous all-time high of c.350,000 sqm, reached in 2016. That said, new demand is cooling and is set to print in line with the average for this cycle, rather than its highs.

  • Romania falls on the 45th place in the Social Progress Index global ranking

    Romania falls on the 45th place in the Social Progress Index global ranking

    Romania is ranked 45 out of 149 countries, being surpassed by all the other EU member states, according to the 2019 Social Progress Index, which analyzes the quality of life and social wellbeing and is conducted by the non-profit organization Social Progress Imperative with the support of Deloitte.

    Thus, Romania falls one position compared to last year’s edition and is, according to the registered score, among the countries in the third category in the ranking, after Argentina, Bulgaria and Mauritius.

    The Social Progress Index (SPI) measures the quality of life and social wellbeing of citizens from 149 countries, based on the analysis of three main dimensions.

    The methodology consists of assigning a score for basic needs category items – basic food and medical care, water and sanitation, shelter and personal safety -, for wellbeing category items- access to basic knowledge, access to communications and information, health and wellness, environment quality – and for opportunities category – personal rights, personal freedom and choice, inclusiveness, access to advanced education. Based on the score, the countries in the ranking are grouped into six categories arranged in descending order.

    “Despite the stable economic growth, among the biggest in Europe, the increasing purchasing power and the historical low of unemployment rate, Romania has registered a slight decrease in the quality of life and in social wellbeing over the last year. With modest scores for a series of chapters such as health, access to basic education, water and sanitation, it is clear that, in order to generate social progress, public resources should be redirected towards investments capable of generating economic development and betterliving standards,” said Alexandru Reff, Country Managing Partner, Deloitte Romania and Moldova.

    The analysis dedicated to Romania in the study highlights our country’s weaknesses and strengths compared to 15 other states that have a similar GDP per capita. The items that ranked lowest for Romania are water and sanitation services (83rd place), health and wellness (74th place) and access to basic education (73rd place). The items that ranked best for our country are personal safety (36th place), environmental quality (40th place), basic food and medical care (47th place), personal rights (48th place).

    Norway remains in the leading position

    • In 2019, Norway, Denmark and Switzerland occupy the first places in the ranking, while Chad, South Sudan and Central African Republic are on the last positions.
    • The EU member states, except Bulgaria and Romania, are in the first two categories of countries in the ranking, with a good quality of life.
    • Among the Central and Eastern Europe countries, the best place is occupied by Slovenia (21), followed by the Czech Republic (24), Estonia (25), Lithuania (32), Poland (33), Slovakia (35), Latvia (36), Croatia (38), Hungary (39), Bulgaria (43) and Romania (45).

    Overview of index changes in time

    137 out of the 149 countries included in the analysis experienced an improvement in the quality of life and social wellbeing during 2014-2019, although there is no unitary evolution of the 12 items assessed.

    • The global average on social progress increased from 62.16 out of 100 in 2014, to 64.47 in 2019.
    • From 2014 until now, the items that have improved globally are the access to information and communications, access to advanced education, water and sanitation, shelter, nutrition and basic medical services, environmental quality, personal freedom and choices, and health and wellness.
    • The overall level of personal rights decreased by 4.17 points over the six analyzed years, following its negative evolution in 77 countries out of the 149 in the ranking.
    • Social inclusion, access to basic knowledge and personal safety are among the most stable items.
    • The countries with the largest decline in the social progress index include the United States, Nicaragua, South Sudan and Brazil.
  • Negative evolution for Romanian meat processing and preservation sector

    Negative evolution for Romanian meat processing and preservation sector

    A new study by Coface Romania on the Meat Processing and Preservation Sector indicates a negative evolution of revenues for 2018, with a decrease of approx. 19% compared to the previous year.

    Thus, the African swine fever (ASF) lead to cuts of over RON 1 billion in the turnover of these companies, the consolidated revenues at sectoral level decreasing from RON 6.13 billion (2017) to only RON 4.96 billion (2018), the minimum in the last 5 years. According to NSVFSA (National Sanitary Veterinary and Food Safety Authority), almost 1.000 outbreaks of African swine fever are registered in Romania, just two months before Christmas.

    The Coface study aggregated the data of 507 companies that submitted their financial statements for the year 2018 and generated a consolidated turnover of RON 4.96 billion.

    Companies in this sector recorded a current liquidity of 0.96 throughout 2018, while the working capital, at a slightly negative level, was relatively exposed to negative shocks and volatility (lower revenues or non-collection of receivables). The average duration of debt collection increased to 64 days in 2018, compared to 55 days in 2017, indicating a significant call for commercial credit received from suppliers. As a result, due to the growing financial difficulties, companies in this sector pay their suppliers almost 3 weeks later, increasing their dependency on business partners.

    In 2018, the net result consolidated at the sectoral level was 3.5%, higher compared to 2017 (1.2%). However, 35% of the companies recorded a net loss at the end of 2018, with 17% of the companies having a loss of more than -20%, and 7% of the companies generating more than 20% profit.

    The marginal increase in profit is due almost exclusively to the price increase in the context of excess demand over the available supply, the latter being affected domestically by the PPA virus. Thus, according to the latest figures published by the NIS (National Institute of Statistics), the average price of pork has increased by 5.4% in the first 9 months of this year, after an increase of 2.5% in 2018 and 5.5 % in 2017 (a consolidated average price increase of almost 14% over the last 3 years).

    During the last year, the companies in the analyzed sector allocated significant investments for the expansion of fixed assets. The ratio between capital expenditures (CAPEX) and depreciation ratio was 155% in 2018, which means that investments in fixed assets covered the depreciated fixed assets. Almost half of the companies (44%) made investments in 2018, with a supraunitary Capex/Amortization report.

    A polarized sector that is highly affected at the top

    Of the 372 companies active* in this sector, only 134 companies registered revenues of over EUR 1 million in 2018, concentrating almost 99% of the sector. The analysis of the evolution of companies with a turnover of over EUR 1 million reveals that in 2017 the frequency of payment incidents, both major and minor, was very low. However, about a year after the first case of African Swine fever virus, the payment incidents of the big companies in this sector exploded, reaching the maximum of the last five years in the 3rd quarter of 2018.

    „The Coface study reveals the difficult situation of the meat processing companies operating in Romania: the consolidated revenues have plummeted to the minimum of the last decade, half of the companies are over-indebted, the refused debit payment instruments exploded in 2018, as suppliers are paid with delays, and the outstanding tax liabilities registered in the first semester of 2019 are at the maximum of the last decade. The African swine fever virus (PPA) cut almost 20% of the revenues of companies in this sector, with losses estimated at almost RON 1 billion. Although the authorities declare that the number of active outbreaks has been decreasing lately, there are two months until the winter holidays and 1,000 active outbreaks. The vulnerable financial situation of companies active in this sector, as illustrated by the study, creates the conditions for more imports of meat products for the end of this year and the next one”, stated Iancu Guda, Services Director Coface Romania.

    According to an offcial statement of National Sanitary Veterinary and Food Safety Authority, “Since the first report of the presence of the PPA virus in Romania, as of July 31, 2017 and until now, 524,590 pigs affected by the disease have been eliminated and there are 2,208 cases in boars”.

    In this context, the outstanding tax liabilities reported by the companies active in this sector have exploded, constantly exceeding the threshold of RON 500 million in the period 2017-2018, 3 times over the previous average of the last decade.

  • Economic outlook deteriorates worldwide

    Economic development is expected to deteriorate significantly from +32% currently to -5% worldwide MoneyBuzz! learned from Statista’s  „Global Economic Outlook (GEO) Score” new quarterly report. 

    Measured on a scale from -100% and +100%, the global score reflecting the current economic situation, Q3 2019, is still positive with +32%. However, when discussing the next six months, it drops to -5% worldwide.

    The highest regional current satisfaction score is in the Americas at +44% and the lowest is in Europe at +15%. The score for the expected development within the next six months lowers globally. Overall, the most negative estimation for the future is found in Europe with -22% and the most positive is in Asia with +6%. 

    The country-specific findings highlight this general switch to concern about the future economic situation but vary depending on the respective nation: In the US, a score of +58% for the current economic situation is quite positive, but it deteriorates heavily to -11% when considering the economic development for the next six months. 

    In a similar pattern, Germany’s outlook drops from a current score of +69% to -35%. 

    In the UK, a negative present satisfaction score of -34% goes from very bad to even worse with -54%. 

    Things are different in Italy where the current situation is estimated negatively at -44% but the outlook is +8%, showing an expected improvement over the next six months. 

  • Romania’s Nation Brand Rating Improves, but brand value drops 3%

    Romania’s brand value has dropped 3% to US$216 billion in the Brand Finance Nation Brands 2019 ranking. At the same time, as emerging European markets are seen more favourably by foreign investors, Romania’s Brand Strength Index (BSI) score has improved from 59.0 to 62.7 out of 100, resulting in a brand strength rating upgrade from A to A+. This year, Central and Eastern Europe accounts for 9 out of the top 20 fastest-improving nation brands in terms of brand strength.

    Brand Finance evaluates the relative strength of nation brands, determined by performance on dozens of data points across three key pillars: Goods & Services, Investment, and Society.

    According to these criteria, Singapore has retained its title of the world’s strongest nation brand, earning the elite AAA+ rating and a BSI score of 90.5 out of 100. Although this is a slight drop from 2018, Singapore is the only nation in the ranking to record a BSI over 90.

    The highly prosperous city-state serves as the business hub of Southeast Asia and is renowned for its world-class education, healthcare, transport, and low crime levels. These factors, paired with the nation’s unwavering political stability and commitment to its ‘Future Economy’ strategy, makes the island a very strong and stable nation on the global stage.

    Developing economies catching up

    Looking at the results in brand value, developing economies have seen 30 times faster growth over the past year than developed ones.

    The average year-on-year nation brand value growth among the developing economies stands at 13.9%, compared to as little as 0.4% for the developed economies included in the annual study into the world’s 100 most valuable nation brands.

    This means that – on average – the nation brands of developing economies have been growing at a pace 31.3 times faster than the developed ones.

    Nation brand values of most developed economies have contracted or stagnated year on year. Japan is a notable exception with 26% growth, but even so – it is only the 15th fastest-growing nation brand this year, behind many developing African, Middle Eastern, Asian, and Latin American nation brands.

    Consistently with previous years’ trends, 11 out of the 20 fastest-growing nation brands of 2019 come from the Middle East and Africa, with Ghana (up 67%), Uganda (up 56%), and Egypt (up 50%) in the top 5.

    Although catching up, at US$37.8 trillion – the combined nation brand value of the 65 developing economies in the study remains far behind that of the 35 developed economies – which sits at US$60.3 trillion. Topping the ranking again this year, the nation brand value of the United States alone stands at US$27.8 trillion.

    China shows no sign of slowing

    Claiming second position, China continues to grow at a very healthy rate, recording an impressive 40% increase in brand value to US$19.5 trillion.

    Building on its solid performance in previous years, China is closing the gap behind long-standing leader the US, which has recorded a brand value growth of just 7% over the past year. The difference in value between the two nation brands has dropped from US$12 trillion last year to just over US$8 trillion in 2019.

    The two largest economies in the world have been at loggerheads since July last year in a bitter trade war, with tariffs imposed by both sides on billions of dollars’ worth of imports and exports. 

    Despite this, China’s brand value has defied the expectations of a slowdown, benefitting from the glowing success of some of its most dominant and valuable brands, including ICBC, Huawei, and Alibaba.

    The latter two in particular have embraced strong marketing strategies that mirror their international counterparts, which have helped successfully propel them onto the global stage as legitimate competitors to Western brands.

    Japan overtakes UK

    Behind the US, China, and third-placed Germany, Japan’s brand value has increased 26% to US$4.5 trillion.

    In spite of predictions that its economy would suffer in the face of a global slowdown, Japan has been able to reap the benefits from its solid consumer spend and high levels of business investment.

    As the tech powerhouse economy of Asia, Japan is progressively forward-thinking and outward-looking, protecting itself amid global uncertainty. Championed by Abe and Trump, the Free and Open Indo-Pacific Strategy supports and promotes connectivity and free trade in its own right. However, the nation is contending with its ‘super-aging’ society putting pressure on social and health services.

    Japan has also recorded solid growth in brand strength, jumping to a AAA brand strength rating, with a corresponding BSI score of 85.8 out of 100. 

    Taking fourth rank, Japan has pushed the UK, which saw little uplift from last year (up 3% to US$3.9 trillion), into fifth position. With the final Brexit decision yet to come and therefore not currently accounted for in the nation’s brand value, the next few months will be crucial in determining the UK’s future outlook.

    Ireland makes the most of Brexit

    The uncertainty around Brexit has prevented both the UK and the rest of the EU from faster growth.

    Ireland, however, seems to be making the most of the situation. Ireland’s nation brand value has more than doubled since 2015 – the year before the disruption of status quo through the Brexit referendum – increasing 110%.

    By contrast, in the same period, the UK’s nation brand value and the combined brand value of the other EU member states have only grown 19% and 32% respectively. Confirming strong performance, Ireland is the fastest-growing nation brand in Western Europe in 2019, up 12% to US$604 billion, while all other players in the region have recorded a minimal uptick or a decline. A potential no-deal scenario is however likely to cause challenges for Ireland going forward.

    No new entrants in top 10

    Although there were no new entrants to the club, India (up 19% to US$2.6 trillion) has made the largest jump within the top 10 – from 9th to 7th position.

    The economy was quick to recover after the global financial crisis, with growth now reduced by a recent slowdown in both the manufacturing and construction sectors. The Indian government has launched several initiatives to try and boost the nation’s exposure on the world stage, including ‘Make in India’ and the Swachh Bharat mission.

    Other movers in the top 10 include: Canada, dropping from 7th to 8th (down 2% to US$2.2 trillion); Italy falling from 8th to 10th (down 5% to US$2.1 trillion); and South Korea, which has inched up one place from 10th to 9th (up 7% to US$2.1 trillion). South Korea is one of Asia’s largest economies and benefits from its strong export base and improved structural policies that have bred inclusion and enhanced productivity.

    Top turnaround: Turkey

    Turkey has recorded a remarkable turnaround from its performance in 2018, going from a loss of almost a third of its nation brand value, to this year leaping up 47% to US$560 billion.

    The nation is back on track following a recession and the sharp fall in value of the lira, which tainted the economy in the second half of 2018.

    Turkey has the opportunity to thrive with the advantage of the youngest and fastest-growing population in Europe, as well as looser monetary policies currently in place. Continued geopolitical tensions, however, could potentially blight this improvement.

  • Illnesses caused by people’s behaviours, suffocate healthcare budgets

    The increase in illnesses caused by people’s way of life, influenced by factors such as social isolation, income inequality, poor nutrition and pollution, could suffocate public and private healthcare budgets globally, according to the global survey Social Determinants of Health, made by PwC Health Research Institute.

    „80% of a person’s health is attributable to health behaviours, the physical environment and socioeconomic conditions, according to the survey. The forecasts are worrying: by 2025, the OECD projects that many countries will see obesity and overweight rates exceeding 68% of the population and that makes people more prone to a slew of chronic health problems including diabetes, cardiovascular diseases and even cancers”, said Ruxandra Târlescu, Partener PwC România.

    Countries have been spending more on healthcare every year, USD 8.4 trillion across the globe. Addressing social determinants of health is urgent, and employers, authorities, pharmaceutical companies, insurers and physicians must find solutions that impact both people’s lives and budgets.

    In some states are taking shape strategies that can be replicated worldwide, such as: prevention programs based on digital applications for monitoring the state of health or diseases evolution, health outcomes–based contracts between authorities and pharmaceutical companies or social programs for connecting patients with the same diseases.

    The main conclusions of the PwC survey

    • 57% of consumers surveyed said their doctor had never discussed the important social factors affecting their health.
    • one in five respondents indicated they could not afford a healthy lifestyle, and a
    • 20% said they did not have the time to focus on healthy behaviours
    • 35% are not getting enough sleep at night, because working multiple jobs, caring for family members, lacking proper housing, suffering from stress.
    • 26% think that too much time spent using mobile phones and social media) affects the way they live.
    • The investments already made in healthcare, countries have not been able to bring about the necessary societal shifts to encourage habits that could prevent chronic conditions from developing. Between 1990 and 2010 in the OECD, for example, smoking rates dropped 31%. But alcohol use fell only 8%, and the rate of daily vegetable consumption increased by just 2%.
    • Half of global biopharmaceutical executives surveyed by HRI in February 2019 said traditional drug pricing practices were unsustainable, and 90% said the healthcare system would be challenged to afford the next wave of innovative medicines.
    • Some states are experiencing health outcomes–based contracts that links the price with the treatment results on patients. In these cases, drug companies have more of a stake in making sure patients are able to take all their medications as prescribed and they have healthy behaviours. Otherwise, the companies must repay part of the costs.
    • Patient monitoring using Artificial Intelligence applications installed on smartphones or smart watches is a trend that can help healthcare systems.

    PwC’s Health Research Institute (HRI) conducted a global survey in June 2019 of 8,000 people in eight territories, along with interviews of healthcare organisations leaders and an analysis of more than 20 case studies,

  • Netherlands: What is the secret of Dutch trade?

    Rising protectionism in China and the United States, Brexit, contracting world trade… despite all the clouds on the horizon, the Dutch economy remains surprisingly bright.

    A dominant global maritime and economic power in the 17th century, the Netherlands has remained a major player in world trade. In 2018, the Netherlands was the sixth-largest merchandise exporter in the world and, in terms of GDP, ranked third in 2015 (just behind Ireland and Switzerland).

    However, times have changed: the global economic environment is less favourable and world trade has lost momentum. Coface expects world trade to decline by 0.8% in volume over the full year 2019.

    What could this slowdown in world trade mean for Europe’s largest port?

    An enviable situation in the European context

    In 2018, Dutch foreign trade (exports and imports of goods and services) was equal to 161% of GDP, compared to 50% for Germany. With the seaports of Rotterdam, Amsterdam, Moerdijk, Terneuzen and several international airports, the Netherlands is particularly well equipped and represents an essential logistics platform in the heart of Europe.

    In a tightening global trade environment, it seems that Dutch exports are continuing to develop well with relatively high year-on-year growth rates compared to other countries. This is partly due to oil prices remaining at a high level, with crude oil and gas accounting for a significant share of exports produced in the country, but is also to the fact that the price competitiveness of the Dutch economy has increased in recent years. Labour costs decreased markedly in 2014 and have remained stable since then.

    The Rotterdam effect

    Due to the favourable geographical situation of the Netherlands and its competitive infrastructure, many goods transit via the Netherlands. The “re-export” of these goods is an integral part of the Dutch trade balance sheet. Even though the value added of these exports is very low, their volume has a major impact on trade statistics – this is known as the “Rotterdam effect”. In 2016, total exports reached €432.5 billion, of which €189.1 billion (about 44%) came from re-exports. This means that although the Netherlands recorded a trade surplus of €52.1 billion in 2016, it would have been €20 billion lower without re-exports and imports.

    New and old obstacles are looming on the horizon

    The Netherlands is indeed the gateway for goods trade to Europe, particularly from the United States and China. The new US trade policy is already showing its effects, with a slowdown in Dutch exports to the United States since December 2018. Potential US tariffs on European cars also represent an imminent threat to the Netherlands.

    But the threat of US tariffs is nothing compared to the potential impacts of a no-deal Brexit. According to CBS and the OECD, Dutch companies made a profit of €25.5 billion on exports of goods and services to the UK in 2018 (3.3% of Dutch GDP), making the UK the second-largest trading partner (after Germany) in terms of value added. And even though the United Kingdom has not yet withdrawn from the European Union, the effects of Brexit are already very visible, with the drop in the pound’s value making Dutch products more expensive for the British, therefore reducing their competitiveness.

    What future for Dutch dynamics?

    The Netherlands has unique characteristics, with an openness that makes it highly vulnerable to trade shocks, but simultaneously allows it to quickly adapt its trade relations.

    A slowdown in world trade will not necessarily immediately affect Dutch export data supported by the Rotterdam effect but also due to the increasing independence of production and trade in Europe. Private consumption and investment are now the main drivers of Dutch trade, so even if world trade is weak, the Dutch economy can grow.

    Consequently, despite this difficult global business environment, Coface still expects the Dutch economy to grow by 1.7% and 1.5% in 2019 and 2020 respectively, in line with the average growth rates of the last decade.

  • Situation of insolvencies in Central and Eastern Europe remains positive

    The Central and Eastern European region has experienced unparalleled growth in the European Union. However, a slowdown is expected in the coming years. The region has seen an improvement in economic activity in recent years. In 2017 and 2018, GDP growth in the region rose to 4.6% and 4.3%, respectively, the highest rates since 2008.

    This acceleration in the CEE economy was mainly due to the increase in domestic demand, in particular thanks to the significant fall in unemployment that benefited households. At the same time, households also benefited from strong wage growth, which had a direct impact on consumption. Beyond households’ consumption, growth was supported by an increase in public and private investment.

    The aforementioned period of favourable macroeconomic environment brought effects on solvency of companies in the CEE region. GDP weighted average insolvencies dropped by 4.2% in 2018, contrary to an increase of proceedings recorded a year prior.

    Global economic conditions, particularly in Europe are becoming more tense and will have an impact on insolvencies

    Despite these positive developments, CEE companies also experienced difficulties. The low unemployment rate has led to labour shortages, which have become the main obstacle for businesses, both in their daily activities and in their potential expansion.

    Supply-side constraints – including labour shortages, high capacity utilization rates, rising input costs and the impact of the external slowdown (direct and indirect) – are of concern to companies operating in the CEE region. Household consumption is expected to remain the main driver of growth, although the limited acceleration of investment in fixed assets and lower exports will dampen GDP growth.

    In addition, the slowdown in the euro zone, the escalation of the trade war between the United States and China and the unclear process of the United Kingdom’s withdrawal from the European Union are causing exporters concern because of the potential impact on their companies and economies. Indeed, the expected slowdown in growth in the Central and Eastern European region will be mainly due to the direct and indirect effects of a slowdown in external demand. Average growth in the CEE is expected to reach 3.6% in 2019 and 3.2% in 2020.

    As CEE economies are mostly highly open to external markets, weaker foreign demand will manifest not only in growth rates, but also gradually via insolvency statistics. In this regard, sectors that are strongly exposed to foreign markets will suffer, such as the automotive industry and the ones supplying it with parts and components, namely chemicals and metals sectors.