Lagged recession effect hitting business cashflows now

Thursday 5th November 2009

The lagged impact of slower and defaulting payments between businesses is showing up now, just as the recession is ending, says credit reference agency Veda Advantage.

"Business always lags about 18 months behind consumers when it comes to a downturn in the economy and they are hitting tough times now.," said Veda managing director John Roberts. "The recession may technically be over, but the bad times still have to feed through the economy and businesses will be feeling it well into next year. The tough times aren't over yet."

Veda releases no raw figures, so the significance to the economy of changes in the indicators it reports can be difficult to judge. However, it reports a 49.5% increase in commercial defaults in the year to October, compared with the same 10 month period last year.

Consumer defaults on loans and credit was much less dramatic, up 4.29% over the 10 months to October, compared with the same period last year.

Applications for credit cards and hire purchase are well down, although mortgagement applications are up by one-fifth in the year to date, compared with last year, led by "baby boomers" in the 44 to 62 age group, the same group to show the largest rise in personal credit defaults.

Businesswire.co.nz

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