The loss of dynamism in the global economy has translated into the first annual increase in insolvencies in advanced markets since the global financial crisis of 2008 and 2009. Crédito y Caución forecasts that corporate insolvencies will grow by 2,8% globally in 2019, eight tenths higher than the forecasts made three months ago. “The upward revision is mainly due to a worse-than-expected evolution of insolvencies in North America, which should now exceed the expected growth rate for Western Europe. The Asia-Pacific region is also expected to register a sustained increase,” explains the report.
For 2020, the easing of monetary policy in developed markets, especially in the United States, should provide some support for economic growth and business activity. However, the lack of progress in resolving trade tensions is causing a moderation in investments and an increase in financing risks. In this context, Crédito y Caución forecasts that global insolvencies will increase by another 1,2% in 2020.
By region, North America will register the highest growth (3,2% in 2019 and 1,7% in 2020) as economic stimulus diminishes and businesses begin to face higher costs due to trade tensions. By market, the United Kingdom will experience the largest increase of all countries analyzed (10% in 2019 and 5% in 2020).
The forecast for Spain is positive, with an estimated 5% decrease in 2019, in a context of solid economic growth. " The level of insolvencies remains five times higher than pre-crisis levels, offering ample room for reduction ," the report states. In Portugal, the report also predicts a 6% decrease in insolvency levels. Crédito y Caución forecasts anticipate a 4% increase in Italy, due to institutional uncertainty. The expected rate for France is 3%, while in Germany it is limited to 1%.
