● Lackluster growth, weaker demand will weigh on companies’ performance
● Default rates expected to trend upwards
The outlook for EMEA non-financial corporates for 2020 has turned negative from stable, Moody's Investors Service said today in its annual outlook report on the sector.
The key drivers of the negative outlook are a combination of continued lackluster economic growth for larger European economies - such as the UK, Germany, France and Italy - and weaker demand in some key markets, which will weigh on companies’ performance. This is tempered by low interest rates and good liquidity.
“Despite corporate liquidity remaining generally solid, and low interest rates, we expect defaults to rise, though from a very low base,” said Richard Morawetz, a Moody’s Vice President – Senior Credit Officer and author of the report.
The US and China trade tensions pose a risk for the global economy, but for Europe in particular, trade relations with the US are of greater significance given its exposure to that economy.