The economic news around the world is still a mixed bag. The three largest credit insurance companies (credit insurance is coverage on accounts receivables); Euler Hermes, Atradius, and Coface, have reported on Q1 and offered their thoughts on the rest of 2012.

The consensus is that North America is stabilizing with slow growth. Brazil, Chile and Peru remain low risk countries. But, Argentina’s outlook has been downgraded and remains higher risk along with Bolivia, Paraguay, Ecuador, and others in South America. Asia is showing signs of improving. Japan’s outlook has been upgraded. Many economists feel China’s economy bottomed out in Q1 after a fifth straight quarter of slower growth, although world risks could still hamper a turnaround. Australia and New Zealand, while still showing growth, have had their outlooks downgraded.

Europe is the big concern. There have been downgrades for five to eight European countries. The problems in Ireland and Greece are widely known, however; Spain, Portugal, Italy, and The Netherlands economies all continue to deteriorate. The United Kingdom remains weak.

If you are exporting, especially to the ‘hot spots’, you may want to consider insuring these sales. Credit insurance protects your receivables from default, insolvency, and political risk events. Insurance is significantly less expensive than Letters of Credit and are easier on the capital requirements for your customers. Credit Insurance is also easier to manage than LCs. Credit insurance is very affordable at less than 75¢ per $100 in sales and it can help you avoid losses by alerting you to risky customers and countries.

Jeff Thomas
Thomas Trade Insurance Solutions