Asia faces sharp rise in insolvencies

Atradius news

Atradius forecasts a jump in insolvencies across Asia in 2020, with Hong Kong expected to be one of the most affected markets across the globe.

The increases are primarily driven by the impact the Covid-19 pandemic is having on global economies. Every major economy, except for China, is expected to enter recession this year, the depth and length of which will be determined by the ability of economies to manage health regulations and either exit lockdowns or thrive in social distancing.

Atradius Chief Economist John Lorié commented, “Government measures have reduced the anticipated increase in bankruptcy filings in a range of ways. They have either shifted the threshold for filing, reduced debtor’s ability to force bankruptcy, or provided sufficient financial support to delay filings. However, as the support programs begin to expire, the number of filings should climb rapidly.”

Atradius-Asia-faces-sharp-rise-in-insolvency-2020

Among Asian economies, Atradius forecasts insolvencies to rise 39% in Hong Kong, behind just Turkey and the United States in the global ranking. The city’s economy is in a deep recession and there has been little or no suspension of insolvency proceedings. However, Hong Kong’s government has implemented a sizable fiscal stimulus programme that has helped to dampen the number of insolvencies. Elsewhere in the region, Japan, Singapore and South Korea will experience a considerable growth in insolvencies during 2020 but see a significant decrease in 2021.

Bart Poublon, Head of Risk for Atradius APAC said, “The pandemic has put downward pressure on Asia’s export-driven economies as global supply chains come under pressure and demand wanes. However, as one of the first regions to reopen, Asia is well-positioned to benefit from the rebound in economic activity, which will lead to falling rates of insolvency in 2021.

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.