Wyndham businesses have recorded the second-highest default rate in the state as the COVID-19 pandemic continues to impact upon several industries, according to new analysis.
Credit reporting bureau CreditorWatch launched its latest Business Risk Index (BRI) on February 9, based on business activity across the nation – in more than 300 geographic locations – in the 12 months to January, 2022.
The index revealed that Wyndham businesses recorded a 5.51 per cent default rate during this time frame.
Default is the failure to repay a debt on a loan – such as when a business owner is unable to make timely payments or misses payments.
The only part of Victoria to record a higher default rate than Wyndham was Tullamarine-Broadmeadows, with a 5.69 per cent default rate within the 12 months.
In contrast, the Yarra Ranges recorded the lowest rate of defaults within the state, at 4.43 per cent.
In its analysis of the nation’s business conditions, CreditorWatch stated that Victoria and New South Wales were both “still feeling the effects of extended lockdowns last year (2021)”.
Industries which recorded the highest amount of defaults included construction; accommodation and food services; and information, media and telecommunications.
CreditorWatch chief executive Patrick Coghlan said that the Reserve Bank of Australia (RBA) stated last week (between February 1 and 5) that Omicron has not derailed the nation’s economic recovery from the COVID-19 pandemic.
Mr Coghlan said the RBA had stated that “when case numbers go down, the floodgates will open and consumers will rush out and start spending this $200 billion hoard of cash”.
“I’d love that to happen so businesses can get back on their feet more quickly, but there are a lot of ‘ifs’ about that assumption,” Mr Coghlan said.
“Pressure is mounting for interest rates to rise. If that happens, it will be another hit to small businesses.
“CreditorWatch is expecting business insolvencies to grow steadily this year, even if the RBA doesn’t hike interest rates.”
