Australia has joined Europe as the only markets globally to record a significant increase in company collapses over the June quarter, according to a new report.
The Dun & Bradstreet Global Business Failures Reports showed a 12 per cent increase in Australian business failures for the June quarter, despite insolvencies around the world falling to their lowest levels in nearly four years.
The report follows accountancy and insolvency firm Taylor Woodings analysis of Australian Securities and Investments Commission figures last week, which showed Western Australian company failures were at an all time high.
Dun & Bradstreet chief executive Christine Christian, said Australia had joined the likes of Hungary, Ireland, Italy, Portugal and Span with a sharply rising insolvency risk.
“The rise in insolvencies may have reflected knock-on, lagged effects of the 2009-09 global financial crisis, as well as declines in business credit and relatively higher interest rates,” Ms Christian said.
“Outside the mining sector, sentiment is generally still poor and the strong Australian dollar is straining profits.”
The report also found business failures across advanced economies were down 5.7 per cent, while insolvencies decreased particularly strongly in developing economies such as China and South Africa.
Ms Christian said insolvencies were up across almost all sectors in Australia, but there was significant deterioration in the retail and services sectors.
She said the global outlook held increasing risk for an intensifying upward trend in insolvency levels.
“The global economic recovery is running out of steam,” she said. “Downside risks to growth, including debt crises in Europe and the United States and volatility in financial markets, remain high.
“With growth expected to remain muted for the rest of the year, we are likely to see this further dent corporate profitability and payments performance, raising the risk of corporate insolvency.
“Given relatively favourable macroeconomic conditions in Australia, we expect lagged bankruptcies in 2009 to tail off, however, overall confidence remains weak and this could lead to an increase in business failures going into 2012.”
