Identifying RISK Insolvencies increase as government support ends Mark Hoppe Managing Director Oceania Atradius
During the Covid-19 pandemic, global
these countries experiencing low insolvency levels
insolvencies fell by a cumulative 32% in 2020 –
in 2021 and the withdrawal of fiscal support in late
2021. We believe generous government support
2021 or early 2022.
measures saved not only viable companies but also created zombie companies i.e. the ones that would have defaulted even in normal times. The highest insolvency contractions in 2020
Countries with the lowest insolvency forecasts
were in Australia, Singapore, France, Austria,
Turkey and Brazil are forecast to experience some
Belgium and Italy as insolvency legislation was
of the lowest increases in 2022, at 9% and 6%
temporarily relaxed to protect companies from
respectively but not because of the pandemic
bankruptcy. There has been speculation about
related adjustment, as fiscal support was already
insolvencies rising over the last couple of years
phased out in 2020. Instead, our forecast for
but there was a question mark on when. Now
these countries reflects a deterioration of GDP
that government support is being withdrawn
growth relative to its long-term trend. The Czech
for businesses across most markets, the tide
Republic (5%), Romania (16%), Finland (24%) and
is beginning to turn and we expect a rise in
Switzerland (35%) are forecast to see insolvencies
insolvencies to occur in 2022 and 2023 for the
grow by a relatively small percentage because in
majority of markets globally.
their case most or all of the adjustment to normal took place in 2021.
Countries with the highest insolvency forecasts The highest insolvency rates for 2022 are
Countries with a decrease in insolvencies
expected in Portugal (124% yoy growth),
Two striking outliers are New Zealand and Hong
Netherlands (101%), Singapore (88%), Belgium
Kong, both are forecast to see a decrease in
(83%) and the United States (70%). This is due to
insolvencies for 2022. This is because in their case
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AICM Risk Report 2022
