• Credendo and Trends are publishing the results of their fifth Export Barometer against the background of the US elections and the Covid-19 crisis1.
  • Companies are generally still fairly confident about the future, despite the Covid-19 crisis.
  • 4 in 5 respondents reported experiencing a negative impact as a result of the health crisis.
  • 6 in 10 fear they will still feel the impact of the pandemic on their exports in 2021. 
  • Credendo is supporting Belgian exporters through its reinsurance programme on behalf of the government as well as through a broader range of direct financing and financial guarantees.

Confidence in the economic climate falling slightly in the face of an unprecedented shock

The Covid-19 pandemic has had a sudden and fierce economic impact, the like of which has never before been seen in peacetime. It is the first time since the Great Depression of the 1930s that the advanced and emerging economies have been simultaneously in recession. The IMF predicts that the global economy will shrink by 4.4% this year. The second lockdown shows that this crisis is more like a marathon than a sprint. Given this poor prognosis, it is unsurprising that Belgian companies have less confidence in the economic climate than in recent years, although only to a limited extent. On a scale of 1 to 10, the sentiment indicator currently stands at 5.6. This is a drop of 0.2 compared with last year. The reasons for this are not just the current pandemic, which is having a highly negative impact on our exporters (78%), but also protectionist measures (67%) and Brexit (56%).

As regards sectors considered to have the greatest export potential, we see the same three as last year although in a different order. Unsurprisingly, the pharmaceuticals sector has risen to first place with 62%, closely followed by biotechnology (61%), with chemicals in third place (48%). The current economic climate is forcing business to look closer to home, in view of the many restrictive measures imposed. As a consequence they see the greatest export potential in neighbouring countries (72%) and EU states (49%), although the European continent together with Latin America have been hardest hit by the virus. Economists expect a major upswing for Asia and this is also reflected among respondents (35%) who ranked Asia third for growth potential.  

Covid-19 hitting hard

But no fewer than 8 in 10 Belgian companies report experiencing a negative impact as a result of Covid-19. For almost half of respondents this is reflected in a demand shock, with a drop in demand for their products, and 38% mention total cancellation of orders. 32% refer to logistics problems (transport, delivery, closed borders, and so on). 75% of companies report a negative impact due to the Covid-19 crisis: 6 in 10 report a drop of more than 5% in their exports and for 14% this reduction is actually more than 50%. A large majority (59%) expect this downward export trend to continue throughout 2021 and 22% do not yet see a bright future for exports even in 2022.

Companies are taking the measures necessary to get through this crisis by meeting virtually with clients (video conferencing, for example) (53%), cost cutting (47%) and online sales (34%). 3 in 10 companies say they have been forced to reorganise and 1 in 4 have applied for government support. 

“In these difficult times for Belgian companies, Credendo is seeking more than ever to fulfil its mission and support them. We are doing this on the one hand by acting as a reinsurer on behalf of the government for private credit insurers, allowing the credit limits that the private credit insurers have granted to Belgium-based companies to be maintained. And on the other, we are expanding our range of direct financing and financial bank guarantees, primarily in an effort to reach out to SMEs,” says Nabil Jijakli, Deputy CEO of Credendo. 

Lessons for the future

The dependence of the West on countries such as China for essential products, or the just-in-time principle offers food for thought. Belgian companies realise this as well as they clearly seek to diversify their client portfolio (34%) and their suppliers (23%). They also want to face head on the future challenge of business digitalisation (41%). Nevertheless, 4 in 10 companies are not expecting a growth in exports in the next three years. 

When asked whether they had experienced damage or losses in the past from exports as a result of unpaid invoices, no fewer than 55% of companies answered ‘yes’. Other reasons mentioned were currency fluctuations (31%) and war, revolution and natural disasters (19%). 

“The importance of proper groundwork (country and debtor risk analyses) and of good credit insurance cannot be overestimated. Indeed, the latter will protect against not only the risk of non-payment in case the exporter’s client goes bankrupt, but also political risks such as war, social unrest and foreign exchange shortages,” concludes Nabil Jijakli. 
 

Press contact
Nabil Jijakli
Group Deputy CEO 
rue Montoyerstraat 3
1000 Brussels
Belgium
E n.jijakli@credendo.com
M +32 478 25 11 33

1 1,164 Belgian companies participated in this survey that was carried out in October 2020. 43% of the respondents are CEOs.