Number of corporate insolvencies to increase globally by 26%, and in Poland by 18%

The global rise in corporate insolvencies will be triggered by the Covid-19 pandemic and the economies of Hong Kong, Turkey and the United States will be hit hardest. On the other hand, in Europe, experts from Atradius, the international receivables insurer, predict the largest number of bankruptcies in the Netherlands, Spain and Portugal.

The increase in insolvencies will depend on how much the recession will hit the market. According to Atradius experts, the economic slowdown will be greatest in those countries that have introduced the most stringent and long-lasting measures to curb the spread of the coronavirus. The freezing of economic and social life made normal industrial production and the consumption of goods and services impossible. Demand may also fall in the face of job losses and rising unemployment. In addition, economic uncertainty will induce consumers to cut back on spending and save. Actions taken by individual governments to save the economy will also affect the level of insolvency. 

“Government support for companies during the crisis caused by Covid-19 could temporarily reduce the number of bankruptcy filings. Nevertheless, we expect that in 2020 corporate insolvency in Poland will increase by 18 percent compared to the previous year. Additionally, as the bailout programs begin to expire, the number of insolvencies will increase,” Paweł Szczepankowski, managing director of Atradius in Poland, said.

The economic slowdown will hit extremely hard the construction industry, where operating margins are very low, with increased credit risk mainly for smaller players. The same will be the case of the automotive industry, which is struggling with a deterioration in sales of passenger cars and delivery vans. The machinery, metallurgy and steel industries will also suffer. The durable goods sector as well as textile wholesalers and retailers have also been negatively impacted by constraints in social and economic life.

(WBJ)