Although developed countries are likely to experience low or in some cases even negative economic growth rates in 2012, emerging countries are set to continue growing, albeit more slowly than in 2011.
The eurozone debt crisis, the high level of public debt in the US and other countries and continued pressure on western banks, have diminished confidence in growth prospects for the US and Europe in 2012. This will affect emerging markets that depend partly on capital flows from and exports to these markets. They are likely to see reduced trade flows, volatile commodity prices, exchange rate fluctuations and decreased foreign direct investments.
More cyclical sectors such as commodities, mining, ports and real estate, as well as the financial sector may be hit. The extent of all these factors is difficult to predict, but there is likely to be impact on FMO's portfolio. Of course we monitor these developments closely.
Commercially, FMO enters the year in a position of strength, with a well-filled pipeline. For funding and liquidity, we expect as a top quality sovereign agency borrower to enjoy continued market access. The quality of our equity and loan portfolio may come under pressure due to market circumstances. If the eurozone crisis were to deteriorate into a disorderly default of some member countries and/or the euro were to be abandoned, a deep recession in Europe would ensue. This would also impact developing countries and, in turn, the quality of FMO's portfolio and our access to long-term funding.
Regarding our strategy, next year marks the last of our 2009-2012 strategic period. During 2012, we will draw up our strategy for the period 2013-2016.
Prime focus areas for FMO in 2012 are:
- Innovation and leadership
- Catalyzing funds of (commercial) third parties