According to a survey by credit insurer Coface, roughly 68% of the companies have faced overdue situation in 2013 (compared to 67% in 2012). Overdue situation has moved slightly toward the long-end with 14% of respondents reported their average overdue days more than 90 days, a slight increase of 1 % compared to 2012.
In our experience, companies with more than 2% of long overdue accounts against turnover could have liquidity problem and have high risk of non-payment to their suppliers. While only 30% of the respondents shared that long-term overdue (i.e. at least 180-days) has weighted more than 2% of their annual turnover in 2013, signalling an improvement compared to the 37% respondents in 2012. Such results point to a stabilized corporate payment experience in Asia in 2013.
2014 Outlook: the threat of a slow growth in China looms over the region
From the hawk’s-eye view, Asia’s economic growth momentum remained strong in the post-crisis era, with Coface’s forecast pointing to a 6.1% for 2014. Such momentum partly came from the dividend from economic bloom of the 2 biggest emerging markets – China and India – during the past decade; however, with growth outlook of these two countries notably lower than the long-term growth trend (China averaged 10.6% and India averaged 7.8% between 2000 and 2011).
The upturn in the advanced economies (1.9% forecast for 2014, after 1.2% in 2013) mainly US and European markets will benefit to export oriented economies in Asia like Hong Kong, Taiwan and Singapore. However, the decelerated growth of China expected at 7.2% in 2014 could impact most of the economies in Asia which have been relying on demand of China.
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Source: COFACE
