Euler Hermes: Slower World Trade Growth Expected In 2008

    MONTREAL, July 30 /CNW Telbec/ - Leading accounts receivable insurer
Euler Hermes Canada has issued its mid-year 2008 Global Risk Analysis Report
for emerging economies. The report is calling for lower global GDP growth and
reduced world trade volumes for the remainder of the year.

    World: Expect world growth of just below 3% in 2008 and 2009 with the
United States at 1.1% and 1.4%, Japan at 1.7% and 1.4%, and the Euro-zone at
1.8% and 1.4%. Moreover, the risks remain to the downside and the slowdown
could be prolonged as the world adjusts to the headwinds of financial
de-leveraging and tighter commodity markets, particularly oil. Expect
inflationary pressures to limit the scope for further monetary easing in the
near term and the upside when recovery does get underway. The more adverse
external environment puts the spotlight firmly on sound policies and stable
government in emerging economies, which, so far, are weathering the downturn
fairly well, though they are not immune. World trade growth has slowed further
and will dip below 6% in 2008 (8.5% 2004-07 average). Expect protectionist
calls to increase. Iran and the Middle East generally remain key potential
flashpoints in global politics, while the U.S. presidential elections inject a
further note of uncertainty.

    Asia: High inflation in India has prompted monetary tightening and
inflationary pressures are also a serious problem for Pakistan's new civilian
government. China's policymakers must weigh slowing external demand against
vigorous policy tightening to curb inflation, while avoiding inadequate
tightening that stokes overheating. Cross-straits tensions have lessened with
the election of a new president in Taiwan. Expect rising inflation to be a
further strain on ASEAN growth after strong Q1 growth -- particularly in
Vietnam, which is on a knife edge as it also struggles to contain the impact
of overheating on the external balance. Just five months after the restoration
of democracy, Thailand faces renewed uncertainty with large-scale
anti-government protests and coup rumors, while in Malaysia the ruling UMNO
party for the first time is being seriously challenged by the opposition.
Expect regional growth of 7.6% in 2008 and 7.2% in 2009 (8.8% 2004-07

    Latin America: Inflationary pressure has been met with higher interest
rates in much of the region -- including Brazil and Mexico -- as central banks
have moved to damp expectations, underscoring improvements in the policymaking
framework that augur well for the region's resilience to financial crisis.
Nonetheless, expect regional growth to slow to 4.1% in 2008 and 3.6% in 2009
(5.5% 2004-07 average). As commodity exporters, many economies' external
balances remain supported, but a reversal of recent trends could pose
problems. There are exceptions to the positive response to accelerating
inflation, notably Venezuela and Argentina, where there is little evidence of
inflation being dealt with effectively. In Ecuador and Bolivia radical left
leaderships are struggling to push through constitutional reforms. Central
American and Caribbean economies, highly dependent on tourism and remittances
from the United States, remain in the forefront of the regional slowdown.

    Central and Eastern Europe: Regional growth maintained strong momentum in
Q1, with real GDP up 7% yr/yr, but accelerating inflation--the regional
average hit 12% yr/yr in May -- is a cause for concern. Expect necessary
monetary tightening to slow growth to about 5.6% in 2008 and 5% in 2009. While
Estonia and Latvia are already on course for a "hard landing", overheating
concerns also persist in Romania and Bulgaria and have emerged in Russia and
Ukraine. Continued political instability increases already high country risk
in Turkey and Ukraine at a time when large and growing macroeconomic
imbalances and the deteriorating global environment require sound economic
policies. Slovakia re-valued the central parity rate of the koruna against the
euro within ERM2 by 15% and will join the euro zone in January 2009. Kosovo's
unilateral declaration of independence from Serbia is threatening the region's
fragile post-war balance, particularly in B&H and Macedonia.

    Middle East: The outlook remains uncertain, despite attempts to negotiate
some disputes, including the Palestinian issue and Israeli-Syrian border
claims, and some progress in bridging Lebanon's sectarian divides. Iran and
Iraq continue to be key pressure points. Moreover, while high revenues are
boosting fiscal and current accounts of oil and gas producers, economic data
are not uniformly good, with inflationary pressures building across the
region, and calls for exchange rate regimes to be revised. However, GCC
economies with a fixed US dollar peg are unlikely to alter their systems in
the short term, partly because of their large dollar-denominated external
assets. With high food and fuel prices building social discontent, expect
increased government subsidies, and some regimes to tighten domestic security.
Expect regional annual growth of 5.8% in 2008 and 5.5% in 2009 (5%+ average
since 2003).

    Africa: An anticipated slowdown in regional growth has yet to materialize
in the broad numbers. Nonetheless, expect the increase in overall GDP to
moderate to 6.8% in 2008 and 6.3% in 2009. This will result from uncertain
output from some oil exporters (Nigeria) and structural factors (including
power shortages in South Africa). However, strong growth is likely to prevail
for relatively new oil producers, particularly Angola and Sudan, and some
non-oil commodity suppliers, including Ethiopia, Mozambique, Tanzania and
Zambia. Kenya's new power-sharing government has yet to forge a united front
but the ethnic violence earlier this year appears to have dissipated.
Similarly, riots in Q1 in Cameroon will dent 2008 growth there. The political
and economic problems of Zimbabwe have the potential to derail sub-regional
progress, particularly if refugee flows engender further outbreaks of

    Euler Hermes is the worldwide leader in credit insurance and one of the
    leaders in the areas of bonding, guarantees and collections. With
    6,000 employees in over 50 countries, Euler Hermes offers a complete
    range of services for the management of B-to-B trade receivables and
    posted a consolidated turnover of 2.1 billion in 2007. Euler Hermes has
    developed a credit intelligence network that enables it to analyse the
    financial stability of 40 million businesses across the globe. The group
    protects worldwide business transactions totalling 800 billion. Euler
    Hermes, subsidiary of AGF and a member of the Allianz group, is listed on
    Euronext Paris. The group and its principal credit insurance subsidiaries
    are rated AA- by Standard & Poor's.
    With over 85 years of experience, Euler Hermes Canada is the first
    private trade credit insurer in Canada and offers both domestic and
    export trade credit insurance in more than 200 countries. For more
    information visit:

    These assessments are, as always, subject to the disclaimer provided

    Cautionary Note Regarding Forward-Looking Statements:

    Certain of the statements contained herein may be statements of future
expectations and other forward-looking statements that are based on
management's current views and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. In
addition to statements which are forward-looking by reason of context, the
words `may, will, should, expects, plans, intends, anticipates, believes,
estimates, predicts, potential, or continue' and similar expressions identify
forward-looking statements. Actual results, performance or events may differ
materially from those in such statements due to, without limitation, (i)
general economic conditions, including in particular economic conditions in
the Allianz Group's core business and core markets, (ii) performance of
financial markets, including emerging markets, (iii) the frequency and
severity of insured loss events, (iv) mortality and morbidity levels and
trends, (v) persistency levels, (vi) the extent of credit defaults (vii)
interest rate levels, (viii) currency exchange rates including the Euro-U.S.
Dollar exchange rate, (ix) changing levels of competition, ( x) changes in
laws and regulations, including monetary convergence and the European Monetary
Union, (xi) changes in the policies of central banks and/or foreign
governments, (xii) the impact of acquisitions, including related integration
issues, (xiii) reorganization measures and (xiv) general competitive factors,
in each case on a local, regional, national and/or global basis. Many of these
factors may be more likely to occur, or more pronounced, as a result of
terrorist activities and their consequences. The matters discussed herein may
also involve risks and uncertainties described from time to time in Allianz
AG's filings with the U.S. Securities and Exchange Commission. The Group
assumes no obligation to update any forward-looking information contained

For further information:

For further information: Paul Flanagan, CEO, Euler Hermes Canada, (514)
876-7050,; Louis Planté, Marketing Manager,
Euler Hermes Canada, (514) 876-7044,

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