Trade risk higher than before corona

Those doing business in Belgium with 15 of the top 18 sectors face an increased risk of default. This is according to the annual global risk analysis of 70 countries and 18 sectors carried out by credit insurer Allianz Trade. Globally, the construction, textile and metal sectors come out worst. What is striking is that the risk picture of almost all sectors is still worse than in the pre-corona period. See attached report.

According to Johan Geeroms, Director Risk Underwriting Benelux at Allianz Trade, Belgium's risk picture is worse than the eurozone average. "Globally, 87% of sectors have a 'medium' or 'elevated' risk. Doing business in Asia is safer on average; the highest risk is in Latin America." Geeroms explains that Allianz Trade's sector risk rating is based on the risk of corporate default. This is measured per sector on a four-level scale from low to high (green, yellow, orange and red). Belgium scores orange for 15 sectors in both 2023 and 2024. Countries like Italy, Portugal, Switzerland and the Nordic countries do remarkably better. Belgium scores worst in Western Europe."

Weak demand and excess capacity

We look at four determining factors when assessing risk: market demand, profitability, liquidity and the conditions the sector is facing. And we place that against the backdrop of the overall economy. For instance, we see that the industrial sector is still struggling with overcapacity and weak demand, especially in the eurozone. Growth in the economy is moderate. We assume limited global growth of +2.8% this year and next. With US growth slowing to +1.7% next year and the eurozone coming out at +1.4%. The Chinese economy drops back to +4.3% by 2025.

What makes sectors vulnerable?

Geeroms sees three trends in the risk analysis of sectors. "You have sectors with weak demand and limited pricing power, such as the paper, chemical, agricultural and textile industries. Limited growth and pressure on margins dominate the outlook here. You also see sectors still struggling with supply chain problems. In itself, demand here is often still quite resilient, but operational and geopolitical hurdles persist. Such as in the transport and energy sectors. On the positive side, you see sectors with stable or improving prospects. For instance, because they benefit from the rise of AI or developments such as sustainability or ageing. Think of pharmaceuticals and IT services. We see something of a recovery in risk assessment in automotive, transport and mechanical engineering. But then those have been hit very hard in recent years."

Sectors in Belgium

For Belgium, the important sectors are metals, chemicals, construction and retail.
What are the global trends that (partly) determine the risk profile of these sectors according to Allianz Trade?

Metal

Recent growth and expansion in this sector, including mining companies, has been driven by rising demand in growing economies, the energy transition and high metal prices.

+ Plus points: Despite volatility, prices of many metals are still higher than their historical averages, good for the sector's profitability. There is also a government focus on critical metals that is crucial for a successful energy transition.

- Downsides: Despite growth, the sector faces challenges, including geopolitical tensions, fragmented supply chain with risk of disruption, environmental regulations (plus ESG-related pressures) and the need for technological innovation that requires high capital intensity.

Chemistry

With the conflict in Ukraine, the US has absorbed the market share lost by European companies, and both the US and China have benefited from cost advantages. Slight improvement is in sight but many challenges remain.

+ Plus points: companies in the 'speciality chemicals' and food chemicals sub-sectors are benefiting from relatively higher pricing power thanks to their specificity and stable demand. The rise of electric vehicles and need for batteries provides opportunities for lithium producers.

- Downsides: Large investments remain necessary for capital expenditure and R&D projects. The sector remains very vulnerable to energy prices. And again many ESG-related challenges and new stricter environmental regulations.

Construction

Although construction activity is still underwhelming, there is room for recovery. The significant rise in interest rates and prices of construction materials has passed its peak.

+ Plus points: several structural developments are boosting construction such as sustainability and greening and the development of smart cities. Also, investment in infrastructure is increasing.

- Downsides: construction is highly cyclical, there has been a shortage of qualified personnel for some time and construction companies are also increasingly facing regulatory and environmental challenges.

Retail

Many retailers managed to offset falling volumes by passing on higher prices to consumers. On the cost side, wage growth, high energy prices and rising financing costs put pressure on margins.

+ Plus points: (in developed economies) are consumers' substantial savings buffers, strong labour markets and wage growth.

- Downsides: highly cyclical and fierce competition (including from e-commerce).

Chance of default

According to Geeroms, the current economic situation is a shaky balance. "Economic growth is not holding up. Many sectors are facing margin problems. This increases the likelihood of non-payment. To relieve their liquidity, companies pay bills later and later. Not paying the bill is the next step. In the current economic climate, I advise every company to be extra vigilant about paying their invoices on time. Above all, take immediate action if payment is late."

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Dec 18, 2025

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Weak demand and excess capacity

What makes sectors vulnerable?