Trade conflicts taking toll on businesses: Atradius
The continuing uncertainty of world trade is increasingly taking its toll, according to Atradius, one of the world's largest credit insurers, in its global insolvency forecasts for 2019.
North America is in the lead with 3.2 per cent, and outperforms Western Europe (2.7 per cent). Asia-Pacific, for the first time since 2009, is seeing a significant increase in corporate insolvencies with 1.8 per cent expected.
While the increase in the number of global bankruptcies in the first half of 2019 was mainly driven by Western Europe, North America is now leading. Trade tensions with China are increasingly beginning to hurt the US economy and the number of bankruptcies is increasing for the first time since 2010. Atradius expects the negative effects of this to be increasingly strong and the upward trend in the number of bankruptcies will continue in 2020 with an expected further upsurge of 2 per cent. Many US companies, especially in the vulnerable retail sector, will be affected. Globally, Atradius expects solvencies to increase by 1.2 per cent in 2020.
“The number of insolvencies continues to rise globally. Given the increasing tensions with China, the US has taken over the leading position in the rise of insolvencies from the eurozone. It is also worrying that similar developments are taking place in Asia-Pacific. The number of bankruptcies in this region is increasing for the first time in 10 years. The likelihood of this situation deteriorating further in the coming period is considerable,” said John Lore, chief economist at Atradius.
