Rabat – After two years of Morocco’s COVID-19 epidemic, global business failures might skyrocket, including a 12% increase in Morocco in 2022.
According to a 2022 study by Allianz Trade on global insolvency, business failures are expected to grow again in the context of the crisis in Ukraine and the rising interest rates, following a two-year drop due to state-driven economic support provided against the economic consequences of the COVID-19 epidemic.
“For the first time since 2019, global bankruptcies will rebound in 2022 and 2023,” foresees the insurer, expecting an increase of 10% this year globally and 12% in Morocco.
“In 2021, the demand for working capital has particularly increased in some of Morocco’s strategic economic partners, especially in Asia (+2 days), Central and Eastern Europe (+2 days), and Latin America (+2 days),” the study reported.
According to the Allianz Trade study, there are three factors that could avoid business failure from becoming more common and prevent a massive surge in insolvencies.
First, corporations have substantial financial buffers to absorb new shocks, assuming they are only transitory. Second, according to the study’s own data, the number of vulnerable enterprises declined in 2021.
Third, the numbers released by the listed businesses in Q1 of 2022 demonstrate that they were able to pass on cost increases to their customers.
“These factors suggest that the global economy will be able, at least in the short term, to avoid a major wave of business failures. Nevertheless, companies will need to be vigilant: the normalization of corporate insolvencies has already begun,” explains Clarisse Kopff, CEO of Allianz Trade.
“For some countries, it will take a few years to get back to 2019 numbers, but we are already back to a high level of delinquency risk, both globally and locally,” she added.
While business bankruptcies may still recover, the study promises that these defaults will eventually return to “pre-Covid-19 levels.”
