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Credit limits
- Global approval rates remained relatively flat at around 74 percent against the same period in 2022.
- Access to financing has slowed as banks prepare for an increase in defaults resulting from a high-interest rate environment.
- Limit approval rates reflect a relatively benign claims environment, but as insolvencies increase, it is expected to be reflected in approval rate moderation.
- Our teams are available to assist you in identifying and managing any underinsured exposures and accessing more comprehensive credit limit coverage.
Geographic trends
- Approval rates in LATAM reduced 400 basis points (bps) to 70 percent against the same period in 2022. High inflation and declining consumer confidence are suppressing demand across the region. These conditions are expected to prevail through 2023. High-profile failures have impacted insurer confidence and high interest rates continue to be a headwind to financing.
- In North America, whilst economic growth is slowing, personal consumption has continued to increase, albeit at a more modest pace than in 2022. Investment has weakened, especially in the housing markets due to high-interest rates. Credit limit approval rates remain high at 84 percent.
- Approval rates within APAC increased 300 bps against the same period last year to 80 percent. Domestic demand has so far remained strong despite monetary tightening, while external appetite is weakening. China’s reopening will provide fresh momentum and other emerging economies within the region are also expected to deliver solid growth.
- Approval rates across EMEA are stagnant at 72 percent against the same period in 2022. Markedly lower energy prices are working their way through the economy, reducing firms production costs. The eurozone’s 20 members are expected to grow by 1.1 percent on average. By comparison, the UK economy is expected to grow only 0.25 percent.
Regional acceptance rates
Source: Aon TradingDesk Insights
Sector acceptance rates
Source: Aon TradingDesk Insights
Industry trends
- Automotive approval rates declined are 200 bps lower than the same period 2022. Lingering supply chain issues and low consumer confidence are stalling growth.
- Approval rates for Retail and Wholesale are 400 bps lower than the same period 2022. Lower demand for consumer goods, high inflation and rental costs remain key short-term challenges while online retail and the economic slowdown present longer-term threats.
- Approval rates for Construction remained static for the quarter at 64 percent but declined 100 bps year-on-year. Construction has been one of the principal sectors affected by the global economic slowdown.
- Credit limit approval rates for the Agribusiness sector remain 400 bps higher than the same period last year. Whilst supply chains have stabilized following disruption caused by the conflict in Ukraine, food price inflation remains a key issue for most economies.
- Steel and Metals approval rates increased 300 bps quarter-on-quarter to 73 percent. High demand and margins post pandemic has bolstered balance sheets, but some concern exists as key supply sectors begin to feel the impact of slowing demand.