Asia braces for rising insolvencies as China's economy slows in 2024

As of October 23, 2024, businesses across Asia are grappling with heightened concerns about insolvency, mainly due to the ongoing economic slowdown in China. The 2024 Atradius Payment Practices Barometer survey highlights that a considerable number of companies are feeling the pressure, with half of those surveyed anticipating an increase in insolvency risk in the coming months. Such apprehensions are particularly pronounced in markets like India, Indonesia, Japan, and Singapore, where insolvency fears are notably pronounced. The detrimental effects of late payments are being felt across the region, with an average of 46% of B2B credit sales affected by such delayed payments. Additionally, problems with bad debts are significant, with bad debts representing 4% of B2B sales invoices issued by Asian companies. This troubling trend suggests that many companies are struggling to maintain their cash flow and financial stability in a challenging environment. The global economic forecast adds to the uncertainty, with expectations of only 2.7% growth amid weak demand and tight credit conditions. Andreas Tesch, Chief Market Officer of Atradius, emphasizes that the anticipated 23% increase in global insolvencies in 2024 is a significant worry and may lead to deteriorating credit quality and payment behavior in Asia. This cumulative strain on businesses raises the stakes for profitability and underscores the need for proactive measures to manage credit risks moving forward. The complete report from Atradius offers further insights into these critical issues facing the Asian economy.