Global growth is too slow to prevent insolvencies from increasing. Insolvencies are expected to rise in most emerging countries in 2016 and in the USA, while decreasing in Western Europe. Worldwide, insolvencies are expected to increase for the first time since the 2009 global financial crisis. Big ticket bankruptcies are on the rise, although the number of insolvencies globally has not increased significantly in H1 2016 vs H1 2015. Payment terms are not improving globally: 1 in 4 companies is paid after 3 months.
According to new research from Euler Hermes, global liquidity will remain abundant due to monetary easing by central banks. However, in its updated risk analysis for Q3 2016, the company suggested that global growth would reach its lowest level in 2016 (2.4%) and in 2017 will be below 3% for the seventh consecutive year, with a modest increase on 2016 driven by the US and emerging markets.
“Global liquidity should remain abundant due to further monetary easing by major central banks, despite the U.S. Fed hikes,” said Ludovic Subran, chief economist at Euler Hermes. “However, low rates and monetary policies are far from uniform, so liquidity can move rapidly across the regions, generating volatility and turbulences.”