Firms in Asia worried on outlook for insolvencies: Atradius survey

Companies across Asia are concerned over the outlook for insolvencies in the coming months, adversely affecting prospects for business to business (B2B) trade on credit, according to the 2024 edition of the Atradius Payment Practices Barometer survey published October 23.

A rising level of insolvency risk has emerged as a major concern looking ahead for half of companies surveyed by Atradius across Asia, with widespread worries it could negatively impact B2B trade on credit. Businesses are preparing for ripple effects and payment risks, adding to further anxiety about future profitability.

“Weak demand and tight credit conditions are straining businesses.”

At the heart of the concern is the current uncertain economic landscape, largely driven by the slowdown in China’s growth. The survey reveals that Chinese companies show the least anxiety about future insolvency risk.

India, Indonesia, Japan and Singapore are the markets most preoccupied about future insolvency risk but concern right across Asia reflects the view outlined by Atradius economists in the latest Insolvency report which forecasts an increase in insolvencies across Asia in 2024.

“The global economy is set to grow by 2.7 percent this year, but weak demand and tight credit conditions are straining businesses,” said Andreas Tesch, chief market officer of Atradius.

“We expect global insolvencies to increase by 23 percent in 2024, and China’s current economic slowdown is raising concern about rising insolvencies among many Asian companies. This could lead to deteriorating credit quality and B2B payment behaviour in several economies across Asia.”

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