Recently, Maersk, headquartered in Copenhagen, issued a statement stating that due to no substantial signs of a rebound within the year, global container trade may shrink by up to 4% this year, compared to the previously expected decline of 2.5%.
Our expectation is not an economic recession, but a very sluggish environment that will continue for the rest of this year, "said Vincent Clerc, the company's CEO, hoping for some recovery in the market and a return to positive growth areas by 2024. We are still very concerned about the global economy.
Recently, a wave of corporate default and bankruptcy is sweeping the world. According to Bloomberg data, the global scale of corporate defaults has reached over $500 billion. Moody's predicts that global corporate default rates will continue to soar, and in extreme cases may even exceed the 2008 financial crisis period. Analysts are concerned that this corporate default storm will increase the risk of economic recession.
Corporate default rates continue to soar
On the surface, the trend of large-scale corporate defaults is a common occurrence in global financial markets. However, there is a deeper and more unsettling mainline behind this: over the past few years, long-term low interest rates have made funds exceptionally cheap, leading to a surge in debt. As central banks around the world raise interest rates and maintain them for longer than previously expected, the long-term debt accumulated by companies will be subject to "post autumn accounting".
According to data from S&P Global, in the United States, before the Federal Reserve began this aggressive rate hike cycle, the amount of US junk bonds and leveraged loans issued by riskier and less creditworthy companies more than doubled compared to 2008, reaching $3 trillion in 2021. As global economic growth slows down, these maturing debts increase the risk of corporate default.
Data shows that since 2021, the number of distressed bonds and loans in the Americas alone has surged by over 360%. The market is concerned that if this default scale continues to spread, it may lead to the first widespread default cycle since the financial crisis.
This situation is happening. According to Moody's data, in June this year, the 12 month default rate of global enterprises reached 3.8%, higher than the historical record level of 2.8% in December 2022. Among them, in the first half of this year alone, 55 US companies have defaulted, accounting for the majority of global defaults (81), more than the entire year last year (36). Meanwhile, according to data from S&P Global, the number of US companies filing for bankruptcy protection in the first half of this year exceeded any comparable period since 2010. The number of bankruptcy cases from the beginning of the year to the present has nearly doubled compared to the same period last year, to 340.
Increase the risk of economic recession
Analysts are concerned that this corporate default storm will affect the global economy. Due to the previous banking crisis in the United States and Europe, coupled with the continuous rise in interest rates, banks have reduced their loans, leading to a wave of defaults that will hit the economy. Reducing the risk of loans and corporate defaults can also lead to a tightening of financial conditions, increasing the risk of economic recession. Bank of America warned earlier this year that a more severe credit environment combined with a comprehensive economic recession could lead to nearly $1 trillion in corporate debt defaults. and