The increase in insolvencies continues at an accelerated pace in 2023, followed by a more tempered increase in 2024, said Atradius recently.
As the world adjusts to post-pandemic normality, there has been a sharp increase in business failures, the trade credit insurer noted.
Many have collapsed under the pressure of squeezed profit margins and difficulties in accessing finance, or funding debt amid higher interest rates, the firm added.
Highlights of Atradius’s research
- The insolvencies adjustment process, which was already initiated in 2022, is continuing at an accelerated pace in 2023.
- After a global increase of 9% in insolvencies in 2022, 2023 will see a 34% increase.
- The highest insolvency growth rates in 2023 are in Hong Kong and South Korea, as well as the US, Netherlands and Italy
- The increase continues at an accelerated pace in 2023, followed by a more tempered increase in 2024.
- In 2023, the increase is driven by normalisation after the pandemic and the bankruptcy of zombie firms.
- Less government support alongside tighter lending conditions create a challenging environment for companies globally.
- For 2024, a global increase in insolvencies will be mainly driven by a minority of markets that started the post-Covid adjustment later or did not start yet or has started later.
- The phasing out of fiscal support measures and the lifting of temporary changes to insolvency legislation have had an effect on the level of insolvencies.
- The rising insolvencies are across the board, with North America experiencing a relatively strong increase, while Europe is seeing milder increases.
- The majority of countries in each region can expect rising insolvencies this year. In 2024, the picture is more mixed.
- While there is an increase for most markets, the percentage increase is lower than in 2023.
- On a global level, insolvencies in 2024 are expected rise by 19% compared to 2023.
- By the end of 2024 insolvencies are expected to have more or less normalised compared to pre-pandemic levels.