Euler Hermes: Finally, good news on global trade

Euler Hermes believes that there are developments that could support corporate growth in the years ahead. First, investment flows are set to recover by 3 percent in 2018 backed by stronger corporate balance sheets, better investor sentiment and large infrastructure projects.

In addition, even if the energy seems to have drained from globalization, corporates may still benefit from new free trade agreements made between countries, such as the Regional Comprehensive Economic Partnership in Asia, which includes the 10 ASEAN member states as well as Australia, China, India, South Korea and New Zealand.

In specific sectors, Euler Hermes assess that increasing pricing due to rising demand in both advanced and emerging markets will strengthen primary commodities. In particular, energy is expected to post strong gains of $578 billion over 2017 and 2018.

Electronics are expected to gain $406 billion and electrical products exports $193 billion driven by accelerating private consumption in emerging markets, especially in Asia. Finally, machinery and equipment (+$168 billion), and chemical (+$134 billion) are set to strengthen gradually on the back of higher investment cycle and rising industrial production.

In the eight country assessments provided in the report, Euler Hermes notes that while the UK will benefit from an upswing in Europe, the sharp depreciation of Sterling following last year's Brexit vote has had no measurable effect. Exchange rate volatility and Brexit related uncertainty in the run-up to the formal European Union exit date (March 2019) will continue to dampen any UK Export dynamics in 2018.

'It obviously will not take much for global trade to be battered by headwinds again,' says Subran, 'But we are firmly positive that the situation is improving.'