Credit Manager Magazine 9/2021

48 CREDIT MANAGER MAGAZINE WRZESIEŃ / SEPTEMBER 2021 The recovery of the global economy continues. Maintaining business continuity remains the key While the COVID-19 pandemic remains one of the biggest challenges for businesses, the global economy is recovering. According to the Atradius Economic Research study from August 2021, losses have already been recovered in the second quarter of this year and the economy is expected to grow by 6.2 percent in the coming months. However, the level of recovery varies, in part due to uneven vaccination rates across countries and with the Delta variant being the main threat to recovery. At the same time, we anticipate that the number of corporate insolvencies worldwide will increase as many temporary measures to prevent insolvencies are phased out. Atradius Although the global incidence rate of COV- ID-19 is increasing as more infectious variants spreads, public and economic sentiment is improving and the trade recovery continues. We estimate that global GDP will grow by 6.2 percent in 2021 and we forecast 4.7 percent growth for 2022. The Delta variant and slowed down vaccination rollouts in some countries remain the main risks for recovery. According to theAtradius EconomicResearch, global merchandise trade has surpassed pre- -pandemic levels, with the 12-month rolling average growing 3.5 percent y-o-y in May 2021. We expect that this revival will contin- ue in the near term, but will lose some mo- mentum. At the same time, the risk of rising inflation remains high, especially in emerging markets. This forces central banks to tighten the monetary policy, which holds back the re- covery and threatens economic growth. Eurozone and UK forecast In connection with the follow-up of the vacci- nation program and the good situation in Eu- rope, the lifting of further restrictions and, con- sequently, greater optimism among the public can be expected in the upcoming months. Ac- cording to the European Sentiment Indicator (ESI), calculated by the European Commission, the sentiment of Europeans remains high. The index grew in July this year to 118.9, which is well above the neutral level of 100. On the other hand, the eurozone inflation rate rose, reaching 2 percent y-o-y in May, its highest level since late 2018. Still, the Euro- pean Central Bank is expected to continue its loose monetary policy – we do not expect the ECB to raise interest rates before mid-2024. Our prediction is that the UK economy will grow by as much as 7.3 percent, but will not reach pre-pandemic size before 2022. Con- sumers are driving the recovery in the UK, with strong growth particularly in the hospi- tality sectors. This momentum is expected to continue. Government-sponsored loan pro- grams have helped to keep corporate insol- vencies low, and job retention programs have prevented unemployment from rising signif- icantly. The bankruptcy problem will intensify The key to surviving the crisis is maintaining financial liquidity of companies. Although late payments are a normal occurrence in business, they can turn into serious financial troubles in the long run – payment backlogs are one of the most common causes of liquid- ity loss and, as a result, company bankruptcy. The gravity of the situation is evidenced by the fact that governments around the world have launched assistance programs to mini- mize business losses and protect trade from collapsing. Among the solutions implement- ed by European Union countries, one of the most important was the program supporting clients of trade credit insurers. As it turned out, the governments’ actions did work. The widely expected increase in bankruptcies that was announced at the start BUSINESS “The pandemic is testing companies, including ours, in terms of adapting to remote reality, automating processes, optimizing service with new technologies and preparing staff.”