·       Global business insolvencies are set to rise by +6% in 2023 and +10% in 2024

·       3 out of 5 countries will reach pre-pandemic business insolvency levels by the end of 2024

·       Globally, Days Sales Outstanding (DSO) stand above 60 days for 47% of firms

Allianz Trade releases today its latest Global Insolvency Report and unveils updated forecasts for 2023 and 2024. According to the world’s leading trade credit insurer, after a small rebound in 2022 (+1%), global insolvencies are set to jump by +6% in 2023 and +10% in 2024.

What’s behind this acceleration? The recession in corporate revenues is gaining traction amid lower pricing power and weaker global demand: As of Q2 2023, the revenue recession has been broad-based across all regions for the first time since mid-2020 (-1.9% y/y). This combined with continued high costs is squeezing profitability. As a result, liquidity positions are worsening fast and not likely to improve before 2025.

“Companies still have a sizable amount of excess cash, EUR3.4bn in the Eurozone and USD2.5bn in the U.S. But these cash buffers remain highly concentrated in the hands of large firms and in specific sectors such as tech and consumer discretionary. And in general, most companies are unable to increase their cash positions through operations in the context of lower-for-longer economic growth. All in all, we expect two accelerations in global business insolvencies, with +6% in 2023 and +10% in 2024, after +1% in 2022”, states Aylin Somersan Coqui, CEO of Allianz Trade.

The most vulnerable corporates and sectors are caught between a rock and hard place in 2023, with hospitality, transportation and wholesale/retail on the front line. Other sectors are catching up fast, in particular construction, where backlogs of work have been almost completed – especially in the residential segment. 

“At the same time, higher-for-longer interest rates are reducing demand in sectors such as real estate and durable goods, and will start pressuring solvency in highly indebted sectors, such as utilities and telecom, in addition to real estate, on both sides of the Atlantic. Moreover, global WCR currently stand at a record high of 86 days, more than +2 days above pre-pandemic levels. Higher interest rates also make it even more expensive for companies to finance structurally higher working capital requirements (WCR), which poses risks for sectors such as construction and machinery and transport equipment”, explains Maxime Lemerle, Lead Analyst for Insolvency Research.

At the end of 2023, the normalization in business insolvencies will be complete in most advanced economies, and 55% of countries are likely to see large double-digit increases. This includes the U.S. (+47%), France (+36%), the Netherlands (+59%), Japan (+35%) and South Korea (+41%). Globally, three out of five countries will reach pre-pandemic business insolvency levels by the end of 2024, including large markets such as the US and Germany. On both sides of the Atlantic, GDP growth would need to double to stabilize insolvency figures, which will not occur before 2025.

“Moreover, in a context of slowing global economic growth, payment terms are likely to lengthen, adding to the rise in insolvencies in the coming quarters: Global Days Sales Outstanding already stand above 60 days for 47% of firms. One additional day of payment delay is equivalent to a financing gap of USD100bn in the U.S., USD90bn in the EU and USD140bn in China. With bank loans already drying up for SMEs, closing this financing gap could be a significant challenge,” explains Aylin Somersan Coqui.

Press contact

Maxime Demory

+33 06 46 21 72 69


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