Bankruptcies may increase by 20%: Euler Hermes

Global trade credit insurer Euler Hermes warned that bankruptcies can increase by 20% in Central and East Europe, in which Turkey is included. The sectors with the highest risks are aviation, accommodation and non-food retail, according to the company. 

Euler Hermes has warned the companies against a wave of bankruptcies with an e-book titled “How to protect your company from the domino effects of bankruptcies.” The global bankruptcy rate could increase by 25% with the removal of state subsidies.

Alexis Garatti, Head of Euler Hermes Economic Research Department, said that the state supports that are very helpful in the short term but may cause deterioration in the competition in the medium term. Garatti underlined the increase in the number of companies considered as “zombies” because they can only survive with government support. “The failure of many companies to fulfill their commercial obligations with the withdrawal of state support may create a chain reaction in bankruptcies. There may be a huge bankruptcy wave. Companies should plan how they will be protected against this situation, which can be defined as a domino effect,” he said.

Bankruptcies in central and east Europe, in which Turkey is included, may increase by 20 %, Garatti added. “This rate is estimated as 29% in the Euro Zone, 36% in North America, 19% in in Africa and the Middle East and 22% in the Asia Pacific region. On the other hand, the revenues of all sectors where there is physical shopping or interaction were significantly affected by the pandemic. Aviation (transportation and equipment), accommodation and non-food retail are among the sectors with the highest risk of bankruptcy.”

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