By Guy Longueville Head of Country Risk

Since our November 2007 Overview on Country Risk, the international environment has deteriorated or, at least, the deterioration that was expected at the time has now started to filter through. Since then, the US economy’s likely slide into recession, the persistent refinancing difficulties being experienced by private-sector borrowers in the major western debt markets and the spread of the crisis to other categories of financial institution, such as monoline insurers, have now raised question marks about the sustainability of growth in developing countries (i) and the deterioration in their risk profile, notably credit risk (ii), which had been tending to improve in recent years. The first question focuses on the debate concerning the decoupling of developing countries vis-à-vis developed countries (1).

(1) In this report, the split between developing and developed countries has been kept for convenience purposes, even though it has become disputable, at least in terms of its traditional scope.