Magazine article Business Credit

The Declining Rate of Insolvencies in Advanced Markets Could Taper off This Year

Magazine article Business Credit

The Declining Rate of Insolvencies in Advanced Markets Could Taper off This Year

Article excerpt

As businesses in advanced markets face increasing uncertainty and access to finance becomes more of an issue, insolvencies across those markets are expected to fall at a lesser rate this year than at any recent time since 2009.

In 2016, even though it marked another year of low energy prices and super-loose monetary policy, global GDP growth remained sluggish and rose just a half percentage point to 2.5%, according to credit insurer Atradius in a recent report. This slow growth translated to a deceleration in insolvencies, with corporate failures declining 3%, less than half the 7% decline seen in 2015 and 13% in 2014. To date, the total level of insolvencies is slouching toward 2007 levels.

This year, Atradius expects corporate insolvencies worldwide to drop, but at a rate of only 2%. Meanwhile, global eco nomic growth should increase to 2.8%, but in a business environment troubled in part by the declining influence of low energy prices. "While this should encourage investment in commodity-exporting countries, it will increase costs and lower private consumption growth elsewhere," the credit insurers analysts said. "Increasing price pressures also motivate monetary tightening in some markets, which will increase the cost of financing for many firms in advanced markets. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.