In 2024, the world is witnessing a troubling rise in business bankruptcies, with Slovenia and Germany projected to experience significant increases. According to the Allianz Trade report, Slovenia’s bankruptcies are expected to rise by 12 percent, while Germany faces a staggering 25 percent increase. This trend reflects broader economic challenges affecting companies globally, including geopolitical tensions and slow recovery from the pandemic.
Key Takeaways
- Slovenia’s bankruptcies projected to rise by 12% in 2024.
- Germany’s bankruptcies expected to increase by 25%.
- Global insolvencies anticipated to rise by 11%.
- Major sectors affected include construction, retail, and services.
Economic Context
The Allianz Trade report highlights that the global insolvency index is set to increase by 11 percent this year, with Western Europe being the hardest hit. The construction, retail, and service sectors are particularly vulnerable, facing the highest rates of bankruptcy. In Slovenia, 741 companies declared bankruptcy in the first nine months of 2024, compared to 658 in the same period last year.
Factors Contributing to Increased Bankruptcies
Several factors are contributing to the rise in bankruptcies:
- Geopolitical Tensions: Ongoing conflicts, such as the war in Ukraine, have negatively impacted economic prospects.
- Economic Recovery: A slow recovery from the pandemic has left many companies struggling.
- Financial Conditions: Tightened financial conditions and high financing costs are making it difficult for businesses to operate profitably.
Sector-Specific Impacts
The report indicates that certain sectors are more at risk:
- Construction: Expected to see the largest increase in bankruptcies, with over 18,000 companies projected to fail in France alone.
- Retail: Continues to struggle due to changing consumer behaviors and increased competition from online retailers.
- Automotive: Companies are under pressure from the transition to electric vehicles, affecting suppliers tied to traditional combustion engines.
Global Trends
The trend of rising bankruptcies is not limited to Europe. In the United States, company bankruptcies are expected to increase by 31 percent, while Canada anticipates a 39 percent rise. Asian countries, including South Korea and Japan, are also expected to see significant increases in insolvencies. In Latin America, Brazil is projected to experience a 33 percent increase in bankruptcies due to economic slowdown and tightening monetary policies.
Future Outlook
Looking ahead, the report suggests that the number of bankruptcies will remain high even after 2024. In North America, a further 12 percent increase in bankruptcies is expected in 2025, while Europe may see a slight decrease of 3 percent by 2026, though levels will still be historically high.
In conclusion, the anticipated rise in bankruptcies in Slovenia and Germany reflects a broader global trend driven by economic challenges. Companies across various sectors must navigate these turbulent waters as they face increasing financial pressures and changing market dynamics.
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