Atradius anticipates an increase in insolvencies across most developed markets, reporting that the Eurozone-led slowdown in global growth and the tight financing conditions make it more difficult for businesses to grow.
Uncertainty over the Eurozone sovereign debt crisis and development of the economy has increased tensions in financial markets, though the latter have eased since the European Central Bank intervention of one trillion Euros.
A major issue is that credit conditions in advanced markets have been tight and have shown limited improvement since the financial crisis in 2008. The banking sector continues to consolidate its debts and seeks additional capital to comply with new and stricter regulations. This has created a challenging environment for households and firms, especially in the Eurozone, and to a lesser extent, in the US.
Atradius expects the number of insolvencies to increase across most European markets as those of the US improve, as discussed in the April 2012 Atradius Economic Outlook.
Increases are expected to be the highest in Southern Europe, with forecasts of double-digit growth in Italy and Greece. The insolvency situation is expected to deteriorate somewhat, even in Germany, despite its relatively benign economic conditions. The news from the USA is better, with moderate growth suggesting a projected decrease in insolvencies. Despite this, the forecasted number of insolvencies over the year remains high from an historical perspective.