The study analyzed the effect of the change from low interest rates in the post-pandemic period to high rates in recent months to combat inflation in developed markets.
“Adverse economic conditions have forced companies to adapt quickly. Factors such as higher interest rates, unsustainable debt and falling revenues are increasing the risk of bankruptcies,” he said.
Since 2021, corporate insolvencies have grown by an average of 12% annually across 45 countries observed, representing almost 90% of global GDP. In 2023, insolvencies reached their highest level in more than 10 years, the report explains.
Bankruptcies in the United States, Canada, Poland and the Netherlands increased by more than 50% between 2022 and 2023.
The United States had the worst performance
Bankruptcies in the United States rose significantly in 2023, increasing by 79%. This is due to the delayed effect of the Federal Reserve’s aggressive monetary policy, which raised rates by 525 basis points in less than two years.
Credit conditions will remain tight, the analysis explains, due to persistent stress in regional banks and the commercial real estate sector. The collapse of Silicon Valley and Signature banks in March 2023 set the tone for the rest of the year, with a massive outflow of deposits and a tightening of lending standards.
The data shows that in USA were counted 33,569 business bankruptcy casesthe highest number since 2012.
Mexico is not included in the Dun & Bradstreet analysis, but the report notes that Latin America has seen an economic slowdown, with corporate bankruptcies down 20% in Argentina and 13% in Brazil, thanks to monetary policy adjustments.
Bankruptcies are expected to continue to rise in 2024 due to adverse economic and credit conditions. Adaptability and strategic planning will be crucial for businesses to navigate this challenging environment. The analysis includes corporate enterprises, SMEs, and sole proprietorships.
