As an informed exporter, it is important to know the major economic indicators of the countries where you are exporting. This is important to foresee if there are any possible chances of payment defaults. If there is, changes can be made in the payment terms. Hence, in order to aid this decision making process, we present the findings provided by the Euler Hermes in weekly frequency. Major indicators like GDP, sectoral development changes, major economic policies decision, sentiments after any new political appointment, bank rate changes etc. help in painting the economic condition of the country for the whole week.
Corporate insolvencies in France: micro-enterprises in the wave’s trough
During the first four months of 2019, the rate of corporate insolvencies in France increased by +0.8%. This rate was particularly high during January and February, mainly due to the repercussions of the “Gilets Jaunes” (Yellow Vests) Movement; however, the increasing rate of insolvencies declined in March and April.
Reason: – This is due to an unfavourable international environment (caused by less dynamic growth of major partners and increased protectionism) and by significant supply constraints (for instance, production capacity utilisation rates and recruitment difficulties are at their highest since 2007).
The main sectors responsible for defaults, with the notable exceptions of the construction and agri-food industries, continued to experience a decline at the beginning of this year. Despite government measures to increase their purchasing power, sectors dependent on household consumption have thus seen more defaults, such as personal service, automobile and non-specialised businesses.
Unsurprisingly, micro-enterprises are the first business types to be affected by the slowdown in growth: the increase in insolvencies can be attributed exclusively to those businesses with less than EUR 250,000 in turnover.
As micro-enterprises are the main risks, the financial cost of defaults has been reduced The financial cost of defaults, measured by suppliers’ outstanding debt, decreased over one year, as recorded at the end of April 2019
Continued increase in insolvencies in all major sectors, with the notable exception of construction.
During the first four months of 2019, the main defaulting sectors followed diverse trends. For instance, the construction industry, which accounts for more than a quarter of total insolvencies, recorded a decline in the total number of bankruptcies. While the number of insolvencies stagnated in the home and other building construction segment, the electrical installation and structural work segments were overall positive. The agri-food industry also experienced less insolvency in 2018.
Total of 4% increase in insolvencies are seen in France combing all sectors.
Source: www.coface.com