The economic risks are present but for now Slovenia has no reason to worry as it is shielded by the European Union #INTERVIEWAdriatic Journal 25 October 2018
This is according to Julien Marcilly, chief economist at the insurance company Coface, the keynote speaker at the business conference Risks and opportunities for the Slovenian foreign economy, organized recently by the media company Delo together with the Institute for Strategic Solutions. Marcilly discussed the current risks in the business markets and the position of Slovenia and the Western Balkans in this regard.
Slovenia is predominantly connected to the EU market. In terms of new opportunities, which are in your opinion the biggest risks Slovenia could possibly be facing in unfamiliar markets?
Today business currents are facing very different and very significant risks in the emerging economies. The first one is related to political uncertainties in an increasing number of places. At Coface we have built our own indicator which is showing an increase globally. For example, businesses that want to export to emerging markets in some cases face problems to repatriate profits due to currency issues. This is also a part of protectionism that is right now gaining momentum and this can be issue for businesses that are used to export to certain places. There are also some risks that are always present when you want to export to a less known countries, such as corruption, risky business environment, sometimes lack of information on some businesses and lack of reliability in local judicial system.
What is in your opinion the best way to tackle those risks?
We try to offer solutions in our country assessment where we include the macroeconomic environment, our payment experience, our assessment of political risks, and our assessment of the business environment. Regarding the business environment, we ask our credit analysts in each country very basic questions about business: for example, in Slovenia we ask them if businesses release their financial statements. If so, do they think these statements are reliable or not. If I have problem with a customer, can I get reparation through judicial system or not. We try to combine a lot of these to get an assessment on a country.
Can you name any countries outside the familiar markets that might be a good opportunity for Slovenia to cooperate with?
I think there are still a lot of places in the world where markets are doing well and the level of risk is not really increasing. Southeast Asia is one such opportunity. Similar opportunity is also Sub-Saharan Africa.
With protectionism becoming ever more prevalent, how is it going to impact investments in countries such as Slovenia and other ex-Yugoslavia countries that altogether comprise a market of 20 million?
At this stage protectionism is not a key risk for businesses in this area. It is due to the fact the risk mainly comes from the US. Unless businesses export a lot to the US, this is not a big risk. But there are some concerns the risk could spread to the rest of the world. The good news is that EU acts like a shield. For those who export a lot to the EU, they are protected from protectionism. However, if protectionism spreads to the rest of the world this could be one more uncertainty for businesses. On a global level we have seen more and more businesses being seriously worried about protectionism meaning they are postponing investments and this trend could continue in the coming months.
How do you perceive the business environment in Slovenia and the rest of the Western Balkans?
Slovenia has a pretty good assessment with quite a low risk for business which is very much in line with the country’s good macroeconomic environment. Banking issues have been resolved quite fast. The economic catch-up with the rest of the European Union is not completely done which is good news in the short-term as there is still room for improvement.
The whole interview with Julien Marcilly will be published in the Adriatic Journal's printed publication THE ADRIATIC JOURNAL: STRATEGIC FORESIGHT 2019 due out in January 2019
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