Globally, insolvencies were likely to rise for the fourth time in succession in 2020 albeit at an "unprecedented rate," the subsidiary of the German insurance and financial services company Allianz noted. In 2019, the increase in insolvencies worldwide was only 8 percent.
Euler Hermes expected that insolvencies in the United States would increase by 25 percent, in Europe by 19 percent, and in Germany by at least 10 percent compared to the previous year.
In 2020, the global economy would "probably collapse twice as strong as during the financial crisis," said Ludovic Subran, chief economist of Allianz and subsidiary Euler Hermes.
Euler Hermes is expecting a decline in global economic output by 3.3 percent, or 9 trillion U.S. dollars. The losses were as high as the economic power (GDP) of Germany and Japan combined. "It leaves traces like a meteorite impact that do not vanish overnight," said Subran.
At present, the German economy was being revived after the standstill. However, with German GDP declining by 8.9 percent, the German economy was also sliding into recession, according by Euler Hermes.
German companies would be stabilized by the government's state aid. "The other side of this coin, however, is that the debt burden for many companies will be much greater than before," said Ron van het Hof, chief executive officer (CEO) of Euler Hermes Germany.
Since mid-March, German companies can apply for funds from a special credit program by the government. This program includes promotional loans from the German development bank KfW.
As of last Friday, KfW had received more than 35,000 applications with a total volume of almost 33 billion euros, according to the bank.
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