There would be a 26% increase in bankruptcies at global level in 2021, despite the rollout of vaccines and positive growth figures, said Atradius recently.
An increase is expected in all major regions and countries reviewed, except for Turkey, where bankruptcies were already on the rise in 2020, the trade credit insurance firm noted.
The largest increases are expected in Australia, France and Singapore, according to the company.
These forecasts are mainly based on expectations of gradual phasing out of local fiscal support measures and reopening of bankruptcy courts and proceedings, pointed out Atradius.
Consequently, many companies that were rescued last year by the above mentioned measures, will likely file for bankruptcy in 2021, the firm added.
It’s worth mentioning that the countries with the highest expected increase in insolvencies in percentage terms this year are most likely the ones with unusually low insolvencies in 2020, Atradius said.
Bankruptcy levels expected to remain high at end-2021
Bankruptcy levels in almost all countries examined — except for Germany, Greece, New Zealand and Romania – are expected to be higher at the end of 2021 than before the outbreak of the pandemic, Atradius estimated.
Spain and the Netherlands are among the countries forecast to experience the largest increase in bankruptcies, taking together the forecast of 2020 and 2021, the firm noted.
This is due to a relatively strong reaction of bankruptcies to GDP fluctuations traditionally observed in these countries, the firm added.
Three forces are expected to shape global insolvencies development in 2021: the strength and breadth of economic growth this year, the gradual phasing out of government stimulus and other support schemes, and whether temporary changes in bankruptcy legislation reduced or just delayed filings, Atradius said.
Their combined impact will greatly influence actual insolvency numbers and trade credit risk in 2021 and 2022, the firm added.