In their most recent insolvency forecast, they published their predictions for 22 main trade markets, and while their overall prediction is for a decline in the number of insolvent businesses in 2016, they predict that the decline will be very slight. The possibility of a new global economic recession and the sustained low price of oil pose threats to businesses, however. However, they continue to predict a -5% change in aggregate insolvencies.
The news that the predicted total number of bankruptcies for 2016 is 67% higher than it was in 2007 before the recession, and in some key countries, shockingly higher, is of greater interest. Consider that Portuguese businesses are 440 percent more likely to declare bankruptcy than they were in 2007, while Italian businesses are 280 percent more likely and Spanish businesses are 250 percent more likely. Clearly, the economic recovery has not affected each nation in the same way.
The narrative extends to Greece, which experienced significant economic difficulties in 2015, culminating in the country's parliament accepting a recovery agreement from the Eurozone. 2015 saw an understandable 10% increase in business failures, but 2016 is expected to see another 5% increase, making it a very challenging time to be a Greek business.
The insolvency rates in Switzerland, Luxembourg, Norway, and New Zealand are not anticipated to improve in 2016. While the number of insolvent businesses in the United Kingdom will increase by 1%, this is a precipitous decrease from the 9% increase seen during the 2015 fiscal year.
All of this depends on a series of highly unstable factors in the global economy, especially China's. Numerous revisions have been made to the country's development projections for the year, and the country's stock market has been suspended multiple times due to sharp declines in its value. If China recovers from these setbacks, the global economy could take on a completely different form, one with robust growth despite dire forecasts.
Jason Curtis, the Commercial Director at Atradius, commented on the report as follows: """"""""In spite of strengthening domestic economies, the challenging external environment and low commodity prices are exerting pressure on global markets, which is increasing the risk of insolvencies. Even as the economy recovers, this is a clear warning shot to businesses, who must remain alert to the risks of trading.
Despite improvements in insolvency statistics for the United Kingdom and Ireland in 2015 and forecasted improvements for 2016, the market remains challenging, with insolvency levels substantially higher than they were prior to the recession. Few businesses can absorb the impact of a failed customer, so businesses must continue to safeguard themselves and implement effective credit management systems.""""""
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