Definitive figures for the year 2011 confirm the continued decline in business insolvencies that began in 2010. At the global level, however, this downward trend is very moderate, with the Euler Hermes Global Insolvencies index recording a drop of 4% in 2011 after falling by 5% in 2010.
After these two successive years of declining business insolvencies, and on the basis of its macro-economic forecasts, Euler Hermes anticipates a reversion of this trend in 2012, with a 3% rise in the Global Insolvencies index that mainly reflects the very worrying situation in the euro zone.
"In 2012, the increasing complexity of the debt crisis, austerity policies in euro-zone countries and the fresh deterioration in the outlook for Southern European countries will take a heavy toll on already weakened companies," says Ludovic Subran, Chief Economist and Director of Research at Euler Hermes.
"Lower demand, tighter credit conditions and mounting social demands are additional risk factors for companies across the zone."
In 2011, business insolvencies fell across the world, except in Europe.
With an index down 6% in 2011, Asia-Pacific extended its two-year long improvement (-8% in 2009 and -12% in 2010).
North America recorded in 2011 its second successive year of declining corporate insolvencies (index down 15% after a 7% fall in 2010), which returned to a level close to the past two-decade average.
This contrasted with the euro zone, which was marked by a fresh increase in business failures (+7%) after a slight improvement in 2010 (-1%).
While business insolvencies fell slightly in Scandinavian countries, Germany and France in 2011, Spain, Greece, Portugal, Italy and Ireland are the reason for the rebound in the index in the euro zone as a whole.
"Business failures have reached record levels in Europe and economic forecasts do not point to any improvement in 2012, with high risks of contagion if the debt crisis is not resolved,” says Maxime Lemerle, Head of Macroeconomic and Business Insolvency analysis at Euler Hermes.
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