Opportunities and outlook
In its January 2021 forecast, the World Bank expects the global economy to recover from the pandemic-related recession of the previous year and achieve real growth of 4 %. The global economic recovery process is expected to gain momentum as the occurrence of infections eases over the course of the year.
Aided by the approval of vaccines in the industrialised countries and in larger emerging markets, the stringency of the restrictions is expected to gradually decline, which may initially benefit consumption and later also investment. The economy is receiving a boost from an accommodative macroeconomic interplay of loose monetary policy by the world’s major central banks and generous fiscal stimulus pacts in major economies. As a result, overall economic growth of 3.3 % is expected for the developed countries in tandem with improved pandemic management and vaccination progress. Emerging and developing economies are projected to grow at a higher rate of 5 %, with the figures mainly reflecting a stronger recovery in China (1).
After the sharp contraction in the previous year, the World Bank’s forecast for pro-cyclical global trade assumes growth of average 5.1 % in 2021 and 2022. The moderate revival reflects subdued global investment and a gradual and partial recovery of international travel (2).
According to the European Commission, economic activity in the Eurozone is expected to grow by 3.8 % in 2021. Over the course of the year, the recovery should be supported by favourable financing conditions, an expansive fiscal stance and, once pandemic-related uncertainties subside and vaccinations increase, an upturn in demand. The extent of the recovery will vary across member states. The European Recovery Plan, endowed with EUR 750 billion for particularly affected member states (Greece, Portugal, Spain, Italy), should have a supportive effect, for which, however, national recovery plans must be submitted (3).
For Germany, the Federal Ministry of Economics expects growth of 3 %, with economic output still being affected by the pandemic in the first quarter and subsequently gaining momentum. Initially, the development will remain divided. While industry will develop robustly, the service sector will only gain momentum over the course of the year as the coronavirus pandemic is defeated (4). Catch-up effects also indicate a positive progression. “In view of the historically high savings rate of 16.3 %, a strong countermovement driven by private consumption can be expected as soon as measures are eased (5).” With a view to an improved global economy, exports are expected to grow by 6.4 %, which in turn should lead to increased investment activity by companies (6).
For the emerging and developing countries as a whole, economic recovery is expected in 2021, which may vary depending on the country and will be influenced by pandemic management and access to vaccines. South-East Asia is likely to be the global leader, especially due to dynamic development in China, for which the World Bank expects a high increase in real GDP of around 7.9 %, supported by infrastructure investments. Comparatively higher growth is also expected for Vietnam and Indonesia. For the other regions, growth projections are largely in the 3–3.5 % range. Africa is expected to develop somewhat weaker in view of lower financial resources, also with regard to vaccine procurement, but the outlook is more positive for individual countries such as Morocco, Botswana or Tanzania. Monetary policy is expected to remain accommodative, with boosts coming from the extremely low interest rate environment in developed countries. International investors’ search for higher yields may encourage capital and investment inflows into emerging markets (7).
Apart from the assessment of the economic situation, it is important for AKA’s business focus to assess the risks that may arise from various international developments. These include the possibilities of a longer than expected pandemic due to viral mutations, delays in global vaccine production and distribution. In addition, it should be noted that the recovery of emerging markets is dependent on continued monetary policy support, favourable financing conditions in the international capital market, the development of commodity markets and climatic conditions. Due to the fight against the coronavirus pandemic, public debt, as well as corporate debt, has increased worldwide. Further risks can arise from international political developments. The causes are international trade disputes, as well as geopolitical tensions and conflicts. Political uncertainty resulting from various issues can also hamper further growth expectations.
In return, growth would be boosted by effective, reliable containment of the Covid-19 pandemic and success in further developing vaccines that are also available to lower-income countries. Further positive impulses would come from the strengthening of the international community, trade policy easing, stronger growth in China and the defusing of geopolitical conflicts.
In a business context, opportunities can be defined as the prospect of possible future development or the occurrence of events that could lead to a positive deviation from a forecast or objective for the company. Opportunities are therefore seen as the opposite of risks. AKA sees opportunities in the following areas:
The cooperation with the two new shareholders ING and Deutsche Leasing has already developed very positively in 2020 and offers even broader, additional scope for business intensification, both in the European region and in the German market environment. Beyond the circle of shareholders, AKA would like to further expand its partner network and thus take advantage of specific opportunities on both the business and refinancing sides. AKA’s wide-ranging activities with regard to automation and digitisation will be continued in 2021 and contribute to AKA’s performance on its chosen path of growth. In the area of small-scale Hermes-covered financing, SmaTiX, the connection of the digital platform to the sales channels of the shareholder banks can provide additional growth impetus. Beyond the SmaTiX application, AKA’s web-based electronic platform is designed to enable new, digital product solutions and a connection to other external partners, which can result in development opportunities in the digital environment.
In summary, AKA plans a new business volume of around EUR 1.9 billion across all product groups for 2021. Compared to the previous year, this means an increase of around 12 %.
AKA measures a key performance indicator (KPI) which relates to the quality of its loan business. The percentage of counterparty ratings in the ratings level “greater than 70” when it comes to AKA’s total loan portfolio should therefore not exceed 10 %. AKA plans to achieve this KPI based on the planned business mix. For the financial KPIs, the development is forecast as follows: Net earnings from loan business of around EUR 52.5 million. Compared to the previous year, this means an increase of around 4 %. The driver of the planned increase in earnings is the anticipated growth in new business. On the cost side, an investment and innovation budget of EUR 4.0 million (previous year: EUR 2.4 million) is included, as already done in the 2019 planning for 2020. Taking this separate expense into account, AKA expects the Cost Income Ratio to increase to around 53 % (previous year: 47 %) and the Return on Equity before taxes to be at the previous year’s level of 6.3 %. The effects of the coronavirus pandemic, which will continue on the forecast KPIs in 2021, as well as at the macroeconomic level, cannot yet be estimated by AKA. Therefore, a negative deviation from the target figures cannot be ruled out.
(1) cf. The World Bank: Global Economic Prospects, January 2021. Washington, DC. URL: www.worldbank.org/en/publication/global-economic-prospects. (As at: 10.02.2021). Short reference: World Bank 2021.
(2) cf. ibid.
(3) cf. European Commission. European Economic Forecast – Autumn 2020. Institutional Paper 136. November 2020. URL: ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/ autumn-2020-economic-forecast_en. - Winter 2021 (Interim) Institutional Paper 144. URL: ec.europa.eu/info/ business-economy-euro/economic-performance-and-forecasts/economic-forecasts/winter-2021-economic-forecastchallenging-winter-light-end-tunnel_de (As at: 10.02.2021).
(4) cf. Federal Ministry for Energy and Economic Affairs. 2021 Annual Economic Report. January 2021. URL: www.bmwi.de Redaktion/EN/Publikationen/Wirtschaft/2021-annual-economic-report.html. Short reference: Federal Ministry for Energy and Economic Affairs 2021.
(5) cf. Junge, Svea and Löhr, Julia: Der Aufschwung am Horizont. In: Frankfurter Allgemeine Zeitung of 15.01.2020.
(6) cf. Federal Ministry for Energy and Economic Affairs 2021.
(7) cf. World Bank 2021.