The firm predicts the worst is yet to come in regards to business failures. Worldwide, insolvencies are expected to increase by 35% between 2019 and 2021.
Rabat – According to Euler Hermes, Moroccan businesses, and others worldwide, face a high risk of bankruptcy in the currently precarious economic environment.
According to the credit insurance company’s report, approximately 9,620 Moroccan businesses could file for bankruptcy in 2020. Between 2019 and 2021, failures in Morocco could increase by 25%.
While the situation seems grim for Moroccan businesses, other parts of the world will face even greater risk of bankruptcy. Between 2019 and 2021, Euler Hermes expects the Asia Pacific region to see 31% more failures. Increases in Western Europe will vary across the region, but will average 32%. Morocco’s main economic partners, Spain and France, will face an increase of 41% and 25% respectively.
As cases continue to skyrocket in the United States, it may come as no surprise that the North American country is expected to see the largest increase, of 57% business failures, during this period of time.
Euler Hermes reports that business failures globally will reach their highest levels since 2009. In total, the firm expects worldwide failures to increase by 35% between 2019 and 2021 — which translates to 17% more insolvencies in 2020 and 16% in 2021.
Due to closed commercial courts or frozen bankruptcy registration procedures, Euler Hermes notes that the wave of collapse will be most pronounced in the second half of 2020 and the first half of 2021. Despite the already widespread job loss and economic turmoil presented since the onset of the COVID-19 crisis, temporary state support plans, acting as a shock absorber, likely delay the more challenging times ahead.
The company states that if governments stop support measures prematurely, the increase in business failures could shoot up to 40% or 45% between 2019 and 2021. They also report a worse case scenario — if the global economy takes longer than expected to bounce back from its current crisis, insolvencies could potentially reach 85% to 95%.