Germany is growing at a slower rate. Expectations on trade receivables are negative

As is the case with similar analyses, not all aspects have the same view and different surveys can produce different results. What the three insurers agree on, however, is the expected growth of the German economy. In 2019, it will fluctuate between 0.5% and 0.6%, which is a significantly lower figure compared to 1.4% growth in 2018. The high fiscal stimuli of EUR 9 billion in 2019 did not seem to have helped either. And even the expected up to €12bn for 2020 will not have an effect. As Alexis Garatti, head of macroeconomic development at Euler Hermes, said in an interview for Hospodářské noviny, the situation is mainly affected by two significant shocks. The shock in foreign trade and the shock in the automotive industry, which are linked to other major sectors.

The analyses differ in terms of payment discipline itself. While Coface’s survey found that as many as 85% of companies in Germany were in arrears, rising from 78% in 2017, Atradius still considers the payment discipline of German companies to be very good.

“According to the results of their survey, only 23.8% of the volume of invoices issued was in arrears and thus up to 72.7% was paid on time. In this respect, Germany is the third most responsible country,” notes Tomáš Jurík of Arfin Broker.

The comparison of written-off receivables turned out to be slightly more pessimistic. Their volume rose to 2.1% from the one percent level that had been in effect one year earlier. However, it must be added that the assessed criteria differed slightly for both insurers.

Insurers have identified risk industries

The most problematic sectors include insurer analyses of the automotive industry, metals, which include the steel industry as the main supplier sector for automakers, as well as the textile industry (Coface) and the chemical industry (Atradius). Here, overdue receivables increased to 33%, which is significantly more compared to the German average, according to an Atradius survey.

At the same time, the insurers’ analyses agreed on the negative expectations of German companies regarding economic development and payment discipline. According to a Coface study, up to 30% of companies expect negative economic development. Only 20% of companies count on a positive trend. Similarly, in the Atradius survey, 40% of companies in Germany expect an increase in overdue receivables and up to 25% of companies are preparing to increase the amount of write-offs related to receivables.

In the case of German suppliers, the expected shock may be dampened by companies’ active approach to claims. Most companies check their business partners according to standard methods, such as business information or secures its claims by their insurance. However, this does not apply to the Czech Republic and Slovakia. In an environment of economic shocks, the impact on domestic companies may be greater than that of German partners.

Contact

ARFIN BROKER
Tomáš Jurík
E:
T: +421 903 282 125

Sources

• https://finweb.hnonline.sk/zahranicna-ekonomika/2032148-svetovy-obchod-a-vyrobny-sektor-su-uz-v-recesii
• https://www.coface.com/News-Publications/Publications/Germany-Payment-Survey-2019-Turn-of-the-tide
• https://atradius.sk/správy/payment-practices-barometer-germany-2019.html