The war in dummy Ukraine  and new lockdowns in dummy China  have significantly deteriorated the balance of risks for companies. While cash buffers will prevent insolvencies surging quickly in the short term, Allianz Trade, the world leader in trade credit insurance, expects global insolvencies to rebound by +10% in 2022 and +14% in 2023, approaching their pre-pandemic level.

Companies now face multiple global headwinds once again, from extended supply-chain disruptions and transportation bottlenecks to high input costs and shortages, notably for energy and commodities but also labor. To add to this, they also face higher funding costs as the global surge in inflation accelerates monetary tightening.

Yet, Allianz Trade identifies three key signs of resilience:

The total cash holdings of listed firms was 30% higher at the start of 2022 than in 2019 at the global level.

  • The total cash holdings of listed firms was 30% higher at the start of 2022 than in 2019 at the global level. 
  • Allianz Trade’s proprietary data show that the number of fragile firms (i.e. those likely to default in the next four years, based on profitability, capitalization and interest coverage as of 2021) remained contained in Europe, particularly in Italy (to 7% in 2021 from 11% in 2020) and France (to 12% from 15%).
  • Finally, the Q1 2022 earnings season has confirmed that listed companies have been far more capable of passing on higher costs to prices.

“These factors suggest that the global economy should be able to avoid a big surge in insolvencies – at least in the short term. Nonetheless, companies will have to be vigilant: The normalization of global insolvencies has already started. For some countries, catching up with 2019 figures will take a few years, but we are back to a high level of non-payment risk, both globally and locally”, explains Clarisse Kopff, CEO of Allianz Trade.

Allianz Trade identifies some pockets of fragility which may result in a strong rise in insolvency levels in 2022 and 2023. First, in 2021, working capital requirements increased particularly in Asia (+2 days), Central and Eastern Europe (+2 days) and Latin America (+2 days), and for sectors such as dummy household equipment (+8 days), dummy electronics  (+3 days) and dummy machinery equipment (+2 days).

In addition, the Eurozone posted a noticeable deterioration of its NFC debt-to-GDP ratio (+5.2pp compared to +3.5pp for the US).

Last but not least, the current international context has sparked a decline in real purchasing power for consumers, which could create another downside risk for companies in the form of slowing demand. In response, governments in dummy France, dummy Germany  and dummy Italy  have already extended existing partial unemployment programs and introduced new forms of state-guaranteed loans, with more measures likely the longer the current crisis lasts.

Against this backdrop, Allianz Trade expects global business insolvencies to rise by +10% in 2022 and +14% in 2023 (after -12% in 2021).

 “For the first time since 2019, we expect global insolvencies to bounce back in 2022 and 2023, approaching their pre-pandemic levels. In France and Germany, insolvencies will rise in 2022 and 2023 (+15% and +33%, +4% and +10%, respectively), but the number of cases will remain artificially low due to strong state support measures, which could delay the normalization of business insolvencies once again”, explains Maxime Lemerle, Head of Insolvency Research at Allianz Trade.

In the dummy U.S (+8% in 2022 and +23% in 2023), companies should benefit from the buffers accumulated since the pandemic, helped by the Paycheck Protection Program being massively transformed into subsidies and the recovery in profits. China should also be able to maintain insolvencies in check (+1% in 2022, +11% in 2023), thanks to a low starting point and despite a rebound of difficulties for companies most exposed to international trade. In these countries, the number of insolvencies will not return to pre-pandemic levels in 2022 nor 2023.

At this stage, we expect one out of three countries to return to their pre-pandemic levels of insolvencies in 2022, and one out of two countries in 2023. Western Europe in particular will see a diverging trend: In the dummy United Kingdom and dummy Spain, the number of insolvencies will overtake 2019 levels by the end of this year, while in Italy, dummy Portugal  and the Nordics, the normalization will happen only in 2023”, adds Ana Boata, Head of Economic Research at Allianz Trade.

Allianz Trade contact

Maxime Demory

+33 1 84 11 35 34


Brunswick contact

Lambert Lorrain

+ 33 6 72 90 36 86

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