Forklift News - Financial turmoil hits local shores

Payment problems are becoming a significant issue around the globe.

Australia’s risk rating has been downgraded, along those of other countries, as financial turmoil continues to affect the global economy.

Dun & Bradstreet's latest report reveals that Australia has had its GDP growth forecast revised down from 2.8% to 1.8%, and its country risk rating has been downgraded to DB1d with a deteriorating outlook.

The D&B report states that a negative shock to consumer and investor sentiment, a fall in GDP growth and economic stagnation are the threats that have impacted the Australian economy to date.

The local economy is also facing housing-sector pressures and slowing expansion, with GDP growth at its slowest for over three years in the second quarter of this year.

Payment problems are becoming a significant issue around the globe, with 33 countries, including eight in the Asia Pacific region, paying in excess of 30% of their bills at 30 days or more past terms. In the past quarter alone, an additional six countries have increased their percentage of overdue payments to more than 30%. This trend is having significant impacts on business cashflow at a time when funding to cover shortfalls is difficult to access.

But, says D&B’s chief executive officer Christine Christian, despite the rating downgrade, Australia remains one of the few OECD economies in which central bank rates can still influence the day-to-day functioning of national credit markets.

"Australia will stay in the DB1 risk bracket unless there is evidence of a hard landing occurring. However, the deteriorating outlook indicates that economic conditions will remain challenging for some time.

"Businesses cannot afford to ignore any warning signs that economic and fiscal circumstances could impact customers or suppliers and ultimately cause financial distress," she notes.

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