How is the current international environment affecting exporters and their willingness to trade? In our Allianz Trade Global Survey 2022, we decided to check the pulse of companies in the United States, China, the United Kingdom, France, Italy and Germany. Two surveys were carried out – one before the start of the invasion of Ukraine and one after, involving nearly 3,000 corporates.
After the optimism of the global “grand reopening” in 2021, our survey shows that 2022 could be much more of a rocky road for exporters. Both business and consumer confidence have taken a hit from the war in Ukraine, and higher commodity prices and extended supply-chain disruptions will ramp up the cost of exporting for months to come.
When we look at the overall results of our survey, three trends stand out:
- More businesses are bracing for a hit to turnovers in 2022. In the first round of our survey, just 6% of companies were worried about turnover dropping in 2022;
now, the share has risen to 22%, mostly in the chemicals, energy & utilities and machinery & equipment sectors. To cope with the ongoing slowdown in demand, companies are planning to diversify export markets and increase investments in new markets, proving that export ambitions remain resilient. But the longer the conflict lasts, the greater the risk of the slowdown escalating into a fullfledged demand shock, which could push global trade into a severe recession.
- The legacy of the Covid-19 era, state support is still viewed as the ultimate lifeline in crisis times. High energy prices, geopolitical tensions, increased transportation bottlenecks, sanctions against Russia and input shortages rank among the top concerns for companies. With the additional pressure of rising financing costs and currency risks, around half of the companies we surveyed believe financing support via state-guaranteed loans and direct subsidies would protect their businesses from the fallout of the war. However, in the absence of much more severe economic shock, we are unlikely to see the return of extensive “whatever it takes” policy support as seen during the Covid-19 crisis.
- Non-payment risk is back. More than 40% of European exporters expect payment terms to increase following the invasion of Ukraine and more than half expect a rise in non-payment risk in the next six to 12 months, compared to less than one third before the war. This confirms the normalization in business insolvencies that had already begun before the war, albeit still at a moderate pace. For the main European export markets, we expect insolvencies to rise by more than +10% in 2022.