Those doing business in Belgium with 15 of the top 18 sectors face an increased risk of default. This is according to the annual global risk analysis of 70 countries and 18 sectors carried out by credit insurer Allianz Trade. Globally, the construction, textile and metal sectors come out worst. What is striking is that the risk picture of almost all sectors is still worse than in the pre-corona period. See attached report.

According to Johan Geeroms, Director Risk Underwriting Benelux at Allianz Trade, Belgium’s risk picture is worse than the eurozone average.  “Globally, 87% of sectors have a ‘medium’ or ‘elevated’ risk. Doing business in Asia is safer on average; the highest risk is in Latin America.” Geeroms explains that Allianz Trade’s sector risk rating is based on the risk of corporate default. This is measured per sector on a four-level scale from low to high (green, yellow, orange and red). Belgium scores orange for 15 sectors in both 2023 and 2024. Countries like Italy, Portugal, Switzerland and the Nordic countries do remarkably better. Belgium scores worst in Western Europe.”

We look at four determining factors when assessing risk: market demand, profitability, liquidity and the conditions the sector is facing. And we place that against the backdrop of the overall economy. For instance, we see that the industrial sector is still struggling with overcapacity and weak demand, especially in the eurozone. Growth in the economy is moderate. We assume limited global growth of +2.8% this year and next. With US growth slowing to +1.7% next year and the eurozone coming out at +1.4%. The Chinese economy drops back to +4.3% by 2025.

Geeroms sees three trends in the risk analysis of sectors. “You have sectors with weak demand and limited pricing power, such as the paper, chemical, agricultural and textile industries. Limited growth and pressure on margins dominate the outlook here. You also see sectors still struggling with supply chain problems. In itself, demand here is often still quite resilient, but operational and geopolitical hurdles persist. Such as in the transport and energy sectors. On the positive side, you see sectors with stable or improving prospects. For instance, because they benefit from the rise of AI or developments such as sustainability or ageing. Think of pharmaceuticals and IT services. We see something of a recovery in risk assessment in automotive, transport and mechanical engineering. But then those have been hit very hard in recent years.”