As reported by Atradius, in many advanced economies insolvency risks for businesses are expected to increase this year, after the positive developments seen in 2015. Analysts expect a slight improvement in most markets, with the risks coming from the prospects for the decline in oil prices, the normalization of US monetary policies and the slowdown in emerging countries.
The scenarios remain uncertain, where the level of raw material prices should continue to weigh on the prospects of export-driven economies. Among these, especially in Australia and Norway, where exports represent over 60% of total GDP. And while both economies are slowly adjusting, aided by depreciation and monetary policy easing, insolvencies in Australia are still expected to rise by 6%.
Absolute levels remain higher than pre-crisis levels in both countries, at +22% and +42% respectively. Not forgetting that the same North American markets will also face downward pressure stemming from oil prices. In turn, the monetary measures taken by the Federal Reserve could have a negative impact on businesses, causing a rise in the burden on loans. These divergences between the US and most other advanced markets, however, make US consumer staples more attractive to international investors, improving liquidity levels in the US.
In particular, for the countries of the Far East (Australia, Japan and New Zealand) the turbulence in emerging markets, aggravated by the slowdown in China and by the prices of raw materials, will be an obstacle for businesses. While, at the same time, the decline in demand in emerging markets, aggravated by weaker national currencies, will continue to drag down the exports of companies in the Eurozone, the USA, the UK and Denmark.
In line with the economic recovery inEuro area, the business environment needs another year before reporting significant improvements. With only -5% change in aggregate delinquencies, projected levels of improvement are half of what they were in 2014, when the economy was much more fragile. Greece, in particular, continues to weigh on Eurozone prospects with a further +5% increase in bankruptcies this year, after the +10% estimated in 2015. Political uncertainty, low consumption and capital controls continue to create a very difficult operating environment for the small and medium-sized enterprises that dominate the economic scene in Greece. The Greek debt crisis has brought the amount of default rates to five times the level recorded in 2007. And the level of defaults in the periphery of the Euro Area remains significantly higher than in the years before the global financial crisis: in Portugal it is 4.4 times higher than in 2007; in Italy it is 2.8; in Spain 2.5. Overall, the Netherlands and Spain are expected to see most of the business climate improvements in 2016. Ireland's economic boom is expected to slow slightly this year, with insolvencies down 6% yet, as in Spain, remaining at a level twice as high as in 2007, prior to
