In comparison to the rest of the world, Australia appears to have dodged a bullet when it comes to business insolvencies, but it is not out of the woods just yet.

Despite the Australian government’s temporary support measures, insolvencies are expected to rise by 10 percent this year and potentially increase by another 10 percent in 2022, when compared with statistics from 2019.

Close to home, New Zealand is predicted to have a 10 percent increase in insolvencies in 2021 and 2022 after experiencing an 11 percent drop in insolvencies in 2019 and 16 percent drop in 2020.

These figures are compared with the projected 57 percent increase of business insolvencies in North America by the end of 2022, when compared with figures from 2019. The Latin America region is expected to see an increase of 31 percent and Western Europe is expected to see an increase of 23 percent in insolvencies during the same timeframe. Asia is expected to see an increase of 18 percent.

It is projected that the Asia-Pacific region will outperform other regions of the world, with a 4 percent increase in insolvencies in 2021 and 18 percent for 2022 when compared to figures from 2019.

The government support provided to Australian businesses has cushioned the fall and put the country in a strong position compared with many other regions. Despite this, it doesn’t mean there won’t be companies winding up. Although insolvencies are on the rise across the world, at the present moment Australia is doing better than most countries.

The phasing out of the stimulus measures such as JobKeeper is anticipated to start an increase in insolvencies from the second half of this year. A large number of Zombie businesses will be leading the charge, especially pre-covid zombies, companies that weren’t feasible before the crisis but were kept afloat by the emergency measures.

Another large group of businesses that are likely to end up being force to close will be Covid-19 zombie businesses which are companies weakened by the pandemic, particularly in the sectors most impacted by the pandemic, such as restaurants, hotels, tourism and travel.

Furthermore, there are plenty of still-viable companies that have been scarred by the 2020 hit on cash flow and profitability. The scars will take time to heal, but with the right help and solutions, they can turn their businesses around and prepare for the future.

The Australian Government has revealed that between 16,000 and 40,000 workers who were on JobKeeper during its final stage have lost employment since the $90 billion wage subsidy program was discontinued on Sunday 28^th March.

The recently released figures, are drawn from estimates from Single Touch Payroll microdata for the fortnight ended Sunday 11^th April, are well below the predicted 100,000 to 150,000 job losses that the Treasury had previously anticipated. The Commonwealth Bank of Australia had also earlier predicted that there would be up to 110,000 job losses due to the discontinuation of JobKeeper.

The figures appear to confirm that the employment losses associated with the completion of JobKeeper won’t derail the broader labour market recovery.

The early indicators suggest that despite there being job losses associated with the end of the wage subsidy program, many of these workers appear to have found, or already had, other jobs and have benefited from the broader strength of the labour market.

Now that unemployment is currently down to 5.6 percent, the Australian government expects the unemployment rate to reach 5 percent by the end of 2022, and 4.5 percent by 2023–24.