Doing business abroad: a lot has changed in a short time. Corona and the invasion of Ukraine have caused major shifts. How do you deal with this as an entrepreneur? What are the (new) risks?

The impact of recent developments is huge. Just look at the high energy prices, rising inflation, high raw material prices, high transport costs and the ongoing supply problems of many materials and products.

As an entrepreneur, you have to deal with this. What about your international contacts? Stable customers and suppliers can suddenly be in trouble. Export options are also changing. How do you assess the economic and political developments? If you are aware of this, you can take appropriate measures. Allianz Trade helps you with this

Waiting is not an option. You will now have to respond. As a company, the trick is to respond flexibly to situations that arise. This means that as an entrepreneur you have to explore which alternative solutions there are. Take the disrupted supply chain, for instance. Regular suppliers with whom you may have been doing business for years may be in the danger zone and at risk of disappearing. For example, because they're having difficulty paying their bills. How much risk does your company run as a result? Try to map that out. Allianz Trade has a good overview of the dummy creditworthiness of companies. The next question is how to reduce your company's exposure to supply risks. What alternatives are there? Which lines can you already cast for that?

We believe that the economic and political turmoil will continue beyond 2022. That is why we have sharply revised our forecasts downwards. We now assume a global economic growth of +3.3% (after +5.9% in 2021). For 2023, we forecast a further slowdown to +2.8%. The volume of world trade is also lower. Not +6%, but +4% in 2022.

One of the biggest dangers is runaway inflation. Prices are rising on all sides. This trend was already visible before the invasion but has only intensified since then. Globally, we are assuming 6% inflation for 2022. In some major economies, this will be much higher. For the United Kingdom, for example, we expect inflation to rise to +8.7% in the fourth quarter. Inflation has not been this high in the past forty years.

Due to these rising costs, companies need more and more dummy working capital to keep their day-to-day business running. Many companies are unable to pass on these higher costs. This reduces profitability. This also means that companies have less money left for structural measures that are necessary for a healthy future, such as developing new products, acquisitions, growth, modernisation or debt reduction.

Our research department surveyed 3,000 exporters in the US, China, the UK, France, Italy and Germany. Two surveys were conducted - one before the start of the invasion of Ukraine and one after. Three trends emerged from this survey:

  • More and more companies are bracing for the blow to sales this year;
  • Companies fear a structural decline in demand the longer the conflict lasts;
  • Fear of default. More than half of European exporters (in Germany 60%) expect an increase in default risk.
Read the results of our Allianz Trade Global Survey 2023
We come from a time when the government has long thrown a lifeline to companies. It seems that today, this generous support from governments is not forthcoming. Companies now have to hold up their own pants while they are still processing the consequences of COVID-19. For the main European export markets, we expect corporate insolvencies to rise +10% this year. This is a logical development when you consider that many unhealthy companies have been kept alive thanks to state support. That restructuring is now beginning to unfold.

Customers who will not pay your bill. Or postpone the payment for a long time. How will you insulate your company against such risks? Whether you look at China or towards the former Eastern bloc; in that corner, you'll have to be extra careful. But economies elsewhere are also being infected. Today, in more and more regions, you have to deal with additional uncertainties.

In such a dynamic environment, this is more important than ever to think about ways to neutralise risks. dummy Default of payment is one of them. If customers don't pay your bill, your business could face cash flow problems. You can prevent that with a dummy trade credit insurance from Allianz Trade. We can give you a clear picture of whether your customers (or suppliers) are healthy or require extra attention. If the payment goes wrong, our insurance that you will still get your money.