Global economic and social outlook remains gloomy for corporates

Participants of the final session on day one of Rencontres AMRAE painted a somewhat gloomy picture of the economic and social outlook for 2013. On the economic outlook, Yves Zlotowski, Chief Economist at credit insurer Coface, said that Europe is set to continue to be affected by austerity policies implemented across the region that have had stronger than anticipated effects. He stressed that recent data has shown that France, Italy and Spain, three of the four biggest economies of the eurozone, are still contracting. Systemic economic risks in the region may have dissipated somewhat, he said, but uncertainties over the future of the euro continue to affect markets.hideMr Zlotowski noted that there are still big hurdles to economic recovery in Europe. Public finances remain under pressure, while households, albeit relatively wealthy, have shown an unwillingness to consume as they harbour doubts about future prosperity. A large number of small and mid-sized companies have gone bust in countries like France, where unemployment rates are about to hit 11%, he said. Even Germany, which has outperformed the other big European economies, has had its troubles. Mr Zlotowski said that fewer bankruptcies have occurred there, but that they have involved a larger number of big companies. In other European countries it is SMEs that have been mostly affected. Thierry Pech, Chief Editor at Alternatives Economiques, a monthly magazine on economic issues, said that the economic gloom is exacerbating worrying social trends like the rise of radical populist political parties. According to him, young people in France are not getting the rewards they have been promised, leading to discontentment and unrest. And youth discontentment should not be seen as a romantic, progressive kind of movement, he added. Mr Pech warned that young people can drift, and indeed are drifting, towards populism and intolerance-as the recent rise in popularity of the far right among young French has shown. The emerging world is not exempt from such economic and social risks, participants said during the session. Mr Zlotowski, for instance, pointed out that although the economic outlook is much better in places like China, Russia and Africa, they too face challenges that cannot be ignored by the business world. He highlighted issues such as the rise of discontent among Chinese workers, particularly in rural areas. South Africa and Russia face social and political unrest, while state-owned national champions that are vital for the economies of several countries have been struggling of late, he added. In fast-growing Africa there is much concern about the standards of corporate governance, with reliable information on leading companies still hard to come by, Mr Zlotowski continued. He also said that governments of countries such as China face the huge challenge of meeting the expectations of an emerging and increasingly vocal middle class. Political scientist Francois Heisbourg picked up on this theme. He said the tensions caused by the emerging middle class in China and other emerging countries recall the developments that took place in Europe in the late 19th and early 20th century that led to the rise of populist, authoritarian regimes across the continent. He particularly fears a clash between China's new and Japan's more established middle classes that, in his view, could be the source of a major armed conflict at some point in the future. The panellists agreed that companies with global ambitions have their work cut out when it comes to managing economic, political and social risks around the world. AMRAE's president, Gilbert Canameras, closed the discussion by saying that national regulators could help companies to achieve growth by not adding new and unnecessary hurdles. "Despite all the uncertainties, companies are still there to enterprise and to carry on developing," he said. "It is not necessary that regulators create even more uncertainty by changing rules every year."

Global economic and social outlook remains gloomy for corporates

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