Insolvencies will increase 19% in Portugal and 26% worldwide, in 2021, despite the "deep recession" caused by the pandemic, after having decreased by 5% and 14% in 2020, respectively, according to an analysis by Crédito y Caución today disclosed.
The insurer says that "the withdrawal of stimuli and the normalization of insolvency legislation will cause a significant deterioration in insolvency prospects in Portugal and worldwide" and adds that, "despite the advancement of vaccination programs and the positive evolution of growth , predicts that insolvency levels in almost all countries analyzed – except in Germany, Greece, New Zealand and Romania – will be higher in late 2021 than before the pandemic outbreak.
The predictions of Crédito e Caución – which are mainly based on expectations of the gradual elimination of local fiscal support measures and the reopening of the courts and reactivation of insolvency procedures – point to an increase in the main regions and countries, except in Turkey, where insolvencies have already grown in 2020, anticipating that the biggest increases are expected in Australia, France and Singapore.
The insurer stresses that Spain and the Netherlands are among the countries for which a greater increase in insolvencies is expected, taking together forecasts for 2020 and 2021, due to a relatively strong reaction to fluctuations in the Gross Domestic Product (GDP) traditionally observed in these countries.
Thus, says the insurer, many companies that were rescued by support measures last year, in 2021 are likely to declare bankruptcy and the countries that this year will show the highest percentage increase in insolvencies will, in all likelihood, be those whose values have been unusually low in 2020.
"Three vectors are expected to shape the development of global insolvencies in 2021: the intensity and breadth of this year's economic growth, the gradual elimination of government stimuli and other support plans and temporary changes in bankruptcy legislation, which have reduced or simply reduced delayed submissions to insolvency. Their combined impact will greatly influence the real numbers of insolvencies and the commercial credit risk in 2021 and 2022 ", explains Theo Smid, senior economist at Atradius.
Compared to last year, when the foreseeable increase in global insolvencies did not take place, the insurer claims that worldwide, the number of corporate bankruptcies decreased by 14%, with significant decreases in some of the largest European economies such as Spain (- 14%), Germany (-17%), France (-40%) or the United Kingdom (-27%).
Turkey and Ireland were the only proximity countries in which insolvencies increased in 2020 because in Turkey, companies faced stricter financing conditions and limited government support and in Ireland the increase was only 1%.
Crédito y Caución also states that two factors may explain the surprising trend towards decreasing insolvencies, namely the fact that many countries have introduced changes in legislation to protect companies from insolvency and the fact that governments around the world have adopted measures to reduce insolvency. fiscal stimulus to lessen the adverse economic effects of the pandemic and support, in particular, small businesses.