Evolving macro trends in the credit solutions market

Navigating the current volatile geopolitical and macroeconomic landscape is crucial for businesses. This is essential to ensure uninterrupted trade and access to finance.

Escalating geopolitical tensions and strained trade relations continue to test global economic resilience.

At the same time, Artificial Intelligence (AI) is reshaping the global workforce. Up to 60% of jobs in advanced economies could be affected. Meanwhile, insolvencies are set to rise significantly. A 10% year-on-year increase is expected in 2025.

Increased focus on financial strategy

Given these developments, credit risk management and liquidity planning have become top priorities for finance leaders. Our latest Credit Solutions Market Insights Report highlights the business growth outlook and critical financial considerations.

These insights are essential for financial leaders who are strategically planning and managing risk:

• A politically charged global environment continues to strain economic resilience. Although global growth reached its lowest point in early 2024, manufacturing remains in surplus and in demand.
• Global growth is expected to stay stable, albeit lacklustre, at 3.3% in both 2025 and 2026. PwC South Africa forecasts GDP growth between 0.5% (in a downside scenario) and 1.3% (in an upside scenario) for 2025.
• Sector performance varies, with industries falling into three categories:

• • Weak demand and lower pricing power: Pulp & paper, chemicals, agri-food, retail, textiles and household equipment.
  • Supply chain and geopolitical challenges: Transportation, energy and transport equipment.
  • Stable or improving outlook: Pharmaceuticals, automotive, computers and IT services.

Inflation trends – uneven decline

Global inflation is declining, but the pace of this decline varies across economies. Headline inflation is expected to fall from 6.8% in 2023 to 5.9% in 2024, and then to 4.5% in 2025.

South Africa’s consumer price inflation is projected to average 4.5% in 2025, aligning with this global trend. The factors behind the current decline differ from those in 2023. Last year’s drop stemmed mainly from lower fuel and food prices.

In contrast, the 2024 decrease reflects a broad-based reduction in core inflation. This indicates a more sustainable shift in economic conditions.

Evolving macro trends and AI’s dual impact on the workforce

AI is transforming industries at an unprecedented pace. Breakthroughs in large language models and generative AI have enabled machines to perform cognitive tasks more effectively. These developments offer both opportunities and challenges for businesses.

AI is expected to increase worker productivity, raise incomes, and boost economic growth. However, it also presents risks such as job displacement and widening income inequality.

Advanced economies will likely feel AI’s impact first due to their reliance on cognitive-intensive jobs. Around 60% of jobs in these regions could be affected. Roughly half of workers may benefit through increased productivity and wages. The other half may face declining demand for their labour.

In contrast, emerging and low-income economies will experience slower transformation. AI is expected to affect 40% of jobs in emerging economies and 26% in low-income regions. This slower pace offers both challenges and a buffer against widespread disruption.

Evolving macro trends – insolvencies on the rise

Corporate failures are returning to pre-pandemic levels after a period of historically low insolvencies. According to the Allianz Trade Global Insolvency Index, business insolvencies rose sharply by 11% in 2024. A further 2% increase is expected in 2025 before stabilising at high levels in 2026.

In South Africa, bankruptcies averaged 222 companies from 1980 until 2024. The country reached an all-time high of 511 companies in August 2000 and a record low of 0 in April 2020.

When a company enters business rescue, payments to suppliers and creditors are usually put on hold for months. This delay persists until stakeholders approve a plan. Combined with delayed or missing payments from other debtors, it can create serious cash flow problems in a volatile business environment.

The value of trade credit insurance

Comprehensive and consistent credit management is a critical building block in a company’s success and sustainability. The debtors’ book may be the single most important asset.

Benefits of trade credit insurance:

• Protection against business rescue and liquidations

Business rescues and liquidations are rising across all sectors. Unpaid debts pose a serious risk – even from large, established companies. Trade credit insurance provides support in recovery proceedings. Legal fees and collection efforts are shared with the insurer. If recovery fails, the policy indemnifies the loss, allowing you to focus on running your business.

• Managing trading pressure

In a buyer’s market, businesses often feel pressure to extend credit quickly. Granting credit to unverified clients can lead to costly defaults. Trade credit insurance offers credit assessments, debt collection and financial insights. These tools support better decision-making. Insurers have access to debtor data, enabling fast and reliable credit approvals when time is critical.

• Navigating cross-border trade risks

Expanding into African markets brings both opportunities and risks. Economic, political, and regulatory uncertainties require careful planning. Trade credit insurers help by vetting foreign buyers, setting credit limits and handling collections. This improves transaction flow and reduces financial exposure in unfamiliar regions.

• Affordable protection for small businesses

Trade credit insurance is not just for large corporations. Small businesses can access policies covering a single debtor or a portion of the debtor book. This flexibility suits different risk appetites. Given their vulnerability to large defaults, small businesses can benefit significantly from this protection.

• Mitigating the risk of fraud

Fraud is rising, and businesses under pressure may approve credit hastily. Although trade credit insurance does not cover fraud, it adds a protective layer. Insurers assess a debtor’s creditworthiness before offering coverage. Businesses must remain vigilant—verifying client details, confirming orders, and securing signed credit applications with sureties are key steps to prevent fraud.

Navigating the evolving macro trends

Every business has unique financial exposures. There’s no one-size-fits-all approach to managing liquidity.

Consulting a professional broker ensures tailored strategies to protect your bottom line. With expert guidance, smarter risk management and the right trade credit insurance, you can trade with confidence, unlock capital and secure your receivables.

Maria Teixeira | Specialist | Trade Credit | Aon South Africa | mail me |