business failures are expected to jump 25% this year, says Coface

Published on : 04/06/2020 – 21:17

The week started in the green on the markets. The hope of seeing Europe head towards a possible peak of the coronavirus restoring energy to investors. But the atmosphere remains very feverish. And economic difficulties are far from over. Coface also expects a 25% increase in business failures worldwide over one year.

Coface is carrying out a drastic revision of its calculations. In fact, in his January forecast, the credit insurance expert envisaged an increase of only 2% in business failures.

Not all countries are on an equal footing in the face of this crisis. Bankruptcies in France could increase by 15% and while the recession should be less marked in the United States, bankruptcies could still soar: + 39%. In question, small fragile structures in the service sector, in greater number in the country and less important airbags for these companies.

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Aid plans deployed by States should therefore not prevent an increase in default. It must be said that world GDP could lose 1.3%.

Certainly the third quarter should experience a rebound, but a rebound from a very low floor. And above all, its trajectory is uncertain. Coface expects a soft recovery to continue in the fourth quarter, but fears that a second wave of the epidemic may cause the economy to relapse.

Finally, Coface is concerned about the medium-term solvency risks for emerging countries. Burundi, Angola, Egypt and even India and Brazil are leading the list of countries presenting the greatest sovereign risk.

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