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‘Non-payment Risks are on the Rise in Emerging Markets’
Fundamental Financial Problems
‘Non-payment Risks are on the Rise in Emerging Markets’
  • By Jung Suk-yee
  • January 4, 2016, 01:45
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This year, Korean export firms are expected to be able to find new opportunities in the Korea-China FTA even though the Chinese economy is likely to face a downturn. At the same time, risks associated with settlement in emerging markets such as Russia and Brazil are predicted to rise this year.

According to the Korea Trade Insurance Corporation’s report released on Jan. 3, the United States is forecast to continue its growth during the first half of this year, led by domestic consumption, with the unemployment rate close to zero and the strong dollar contributing to U.S. consumers’ real purchasing power. Similarly the German, Italian and French economies are predicted to show a gradual recovery amid low international oil prices, quantitative easing by central banks, and policies in favor of the weak euro.

China, meanwhile, is expected to encounter some macroeconomic difficulties as exports and investment lose steam and its manufacturing sector remains sluggish to cause its economic growth rate to fall below 7 percent. Nevertheless, the Korea-China FTA, which became effective last month, is likely to be a new chance for Korean firms.

“When it comes to Latin American countries, a delayed economic recovery is the most likely prediction for this year because of the weak demand, adverse fiscal conditions and political instability on the part of China, the largest customer of Latin American resources,” the corporation explained, continuing, “Korea needs to take a selective approach with IT devices and the other major export items at the center.”

It added that Russia is expected to record negative growth this year due to economic sanctions and oil prices, and Korean companies doing business in Russia should give heed to payment risks. As far as India is concerned, the oversupply of cheap steel from China resulting in the losses of Indian steelmakers was mentioned as a key phrase.