As we begin to live with new realities that this global crisis is bringing, I want to thank you, our valued customer, for your continued trust in Euler Hermes. The immediate future remains uncertain for all of us as the Covid-19 health crisis continues, and we are committed to strengthening our support to you. I would like to share what you can expect in the coming months.
First, I would like to highlight the challenging economic picture. We believe we are currently in the eye of the storm, and we do not expect a return to pre-crisis GDP levels before 2022. Our latest predictions are as follows:
- A contraction of the global GDP of -4.7% in 2020 followed by growth of 4.8% in 2021.
- Global insolvencies to rise by 35% by 2021.
- A global trade contraction of -20% in 2020.
By year end, the greater impact of the crisis will become clearer due to the de-synchronization of domestic re-opening and the withdrawal of governments’ stimulus packages and credit support schemes. The disastrous economic consequences of Covid-19 are still in front of us and we must be realistic about what they entail. Business leaders have already told us that cashflow is a major concern. In May, 65% of leaders stated that payment delays affected them in the previous two months. Only 31% of businesses felt fully prepared to deal with payment incidents, down from 44% prior to the outbreak. I fear if surveyed today, the numbers would be even bleaker.
Now is the time to invest in technologies and use business intelligence and networks to fully understand vulnerabilities and predict risk. Leaders should focus on planning, diversification and insurance. We must each adopt bold measures to protect our businesses, drive future growth, minimize risk and enable controlled management of future crises or another wave of this pandemic, which cannot be ruled out.
In this context, our focus is on our customers. This crisis has proven the value of real-time, instantly accessible data. Hence we have strengthened and enhanced our tools and are also developing new technologies to help our partners connect the dots and act early:
- Smoother policy management with new, enhanced features on your customer platform MyEH, including instant online chat, status tracker, cap pricing and cover history.
- Greater understanding of suppliers and business associates with TradeScore as it launches to any company on the market, in more countries*. It offers crucial data exchange between buyers and Euler Hermes with instant access to key financial and sector data.
- Exclusive access to dedicated webinars on key economic indicators to support crucial decision making, such as insolvency data and predictions, macroeconomic and sector specific risks.
- Direct access to the latest economic information and business trends via enhanced online economic data and increased interactions with our in-house experts.
- For smaller businesses, non-payment support and peace of mind with a new dedicated product, designed to meet the specific pressures experienced by micro SMEs.
As we continue into the second half of a very difficult year, knowing tomorrow will not look the same as yesterday, we believe it is now crucial to shift our focus from resilience to adaptation, to face the future with courage. And as we decrypt what the Next Normal will bring, you can rest assured that our teams’ dedication to you is stronger than ever, and that we will continue being there first by your side, helping you regain and grow your confidence in tomorrow.
Wilfried Verstraete, CEO and Chairman of Euler Hermes