Paris – After upgrading many of its country ratings in 2010,Coface today announced 10 country rating downgrades, includingthose for Japan and several countries in the Middle East/NorthAfrica region.

Coface has revised downwards its world growth forecast for 2011from 3.4% to 3.2%, as a result of recent events in Japan, NorthAfrica and the Middle East. Despite this downturn, the economicenvironment remains positive.

Economic shockwaves in Japan
Due to therecent spate of disasters in Japan, Coface hasplaced the country's A1 rating on negative watch. Japan's 2011growth forecast has been revised downwards from 1.5% to 0.3%, aftera 3.9% rebound in 2010.

The economic shockwaves will initially hit exports,traditionally the driving force of Japanese growth. Disruptions topower supplies will have a long lasting impact on output in theprefectures directly affected, as well as in more industrializedareas. Small subcontracting firms with minimal cash flow will beparticularly affected. Although it is difficult to assess theimpact of these events on the global economy at this stage, Cofaceexpects to see repercussions in the global production chain, inwhich Japan is a key player, especially in the automotive andelectronics industries.

According to Coface's main scenario, the rebound should occur inthe third quarter at the very earliest, and will be driven byreconstruction efforts and renewed consumer confidence.

Euro zone growth overshadowed by the sovereigncrisis
The euro zone has been severely hit by thesovereign crisis and is expected to grow by 1.3% in 2011 comparedto 1.8% in 2010. The ratings for most European countries have beenleft unchanged, with the exception of Portugal(downgraded to A4) and Cyprus,heavily exposed to Greek debt (downgraded to A3).Portugal, which is caught up in a political crisis and has justasked the EU for financial aid, will remain in recession this year(-1.3%). Portuguese companies, with a low cash flow rate, willstill find it hard to obtain credit.

Outside the euro zone, in the UK(A3 positive watch removed), drastic austeritymeasures and high inflation will dampen consumer confidence.Manufacturing firms will face shrinking margins due to rising inputcosts.

Countries in North Africa and the Middle East placedunder negative watch
Political uncertainty in theMiddle East/North Africa region could impact the activity andexacerbate the imbalances in public finances and depress currencyearnings. Coface has decided to put Tunisia (A4)and Egypt (B) under negative watch, as thepolitical transition that these countries are going through makesthem fragile in the short term. Syria's rating(C) has also been put on negative watch due to thegrowing wave of political protest in an inadequate businessenvironment. Libya, which is expected to see avery sharp decline in activity of at least 15%, has been downgradedto D.

The rise of oil prices will impact activityworldwide
Coface expects oil prices to flare upsignificantly, driven by socio-political tensions in oil-exportingcountries and reconstruction efforts in Japan, the world'sthird-largest oil importer. In 2011, Coface expects Brent oilprices to rise by 25% compared with 2010 at $100 per barrel. Thiswill knock 0.1 to 0.2 points off GDP growth in the major oilimporting countries: USA (2.5% growth in 2011), Germany (2.3%), UK(1%) and South Korea (3.5%).

In this view, Coface has revised down its world growthforecast from 3.4% to 3.2% (1.7% for the advancedcountries and 5.6% for the emerging countries), compared with 4.2%in 2010. These forecasts also factor in the impact of the eurozone's sovereign debt protracted crisis and the expected slowdownin emerging economies, especially Asian countries, which haveintroduced measures to curb economic overheating.

“After a year of marked recovery, we are now seeing an increasein global risk due to political upheavals and the natural disastersoccurring in the first quarter. The economic downturn is alsoaffecting emerging countries. The recovery continues but at aslower pace,” commented Yves Zlotowski, Chief Economist atCoface.

Country Ratings Updates
Cofacecountry ratings indicate the average level of risk presented by acountry's companies on their commercial transactions. The ratingsdo not assess sovereign debt.

Region Country Dec. 2010 Rating New Rating

Europe Cyprus A2 (negativewatch) A3

Portugal A3 (negative watch)A4

United
Kingdom A3(positive watch) A3

Asia Japan A1 A1(negative watch)

Vietnam B (negative watch)C

Middle
East Bahrain A3A4

Egypt B B (negative watch)

Libya C D

Syria C C (negative watch)

Tunisia A4 A4 (negativewatch)

About Coface
Coface's mission is tofacilitate global business-to-business trade by offering its135,000 customers solutions to fully or partly outsource traderelationship management and to finance and protect theirreceivables: credit insurance, factoring, business information andreceivables management. Due to the worldwide local servicedelivered by 6,600 staff in 65 countries, over 45% of the world's500 largest corporate groups are already customers of Coface.Coface is a subsidiary of Natixis whose share capital (Tier 1) was16.8 billion Euros at the end of December 2010. Visit us atwww.coface.com