Bankruptcies in Slovenia to Increase by 12 Percent, in Germany by 25 Percent

In 2024, the world faced a new wave of business insolvency, with the number of such cases exceeding pre-pandemic levels. According to the Allianz Trade report Global Insolvency Outlook, the number of insolvencies is expected to increase globally by 11 percent this year.

The increased number of bankruptcies is not surprising given the economic challenges companies face, including geopolitical tensions, slow economic recovery, and tightened financial conditions. Particularly in Western Europe and North America, the number of company bankruptcies has increased the most in construction, retail, and the service sector.

31 Percent More Bankruptcies in the USA

The global insolvency index will increase by 11 percent in 2024, but insolvency rates vary between regions. Western Europe, which has been the hardest hit, has experienced the largest jump. The report predicts that the number of insolvencies in Germany will increase by 25 percent in 2024, by 18 percent in France, and by 22 percent in Italy. A record number of large company bankruptcies, which have particularly strongly affected Western Europe, also increases the risk of job losses. By 2025, 1.6 million jobs could be at risk in Europe and North America, the highest level of risk in the past decade.

In Slovenia, the number of insolvent companies will increase by 12 percent. In the first nine months of the year alone, 741 companies declared bankruptcy, compared to only 658 bankruptcies in the same period in 2023. "Economic prospects in Slovenia have worsened due to the war in Ukraine, but the domestic economy is more resilient than in most other EU member states," said Michael Kolb, a board member at Acredia insurance company, which conducted the research together with Allianz Trade.

The Slovenian economy is heavily dependent on exports to Germany, Switzerland, Italy, and Austria, where the number of bankruptcies has significantly increased. As a result, companies in Slovenia will face challenges such as low profitability, frequent payment delays, and high financing costs.

In the United States, company bankruptcies are expected to increase by 31 percent, and in Canada by 39 percent. Record increases in insolvencies are also expected in Asian countries such as South Korea, Singapore, and Japan.

The Latin American region will also experience a significant increase in the number of insolvencies, with Brazil seeing a 33 percent increase, mainly due to economic slowdown and monetary policy that increases financial pressures.

Low Interest Rates Won't Help Much

Lowering interest rates, expected by the end of 2025, will bring only moderate relief to companies. According to the Allianz Trade report, a two-percentage-point reduction in interest rates by 2025 will reduce the number of insolvencies by only four percent. Lack of liquidity, increased financing costs, and limited access to credit will continue to pose problems for many sectors, especially those heavily indebted. According to the report, these include household equipment, the automotive industry, the computer sector, and construction.

The highest risk of insolvency is in industries that have been most exposed in the past two years, such as construction, retail, and services. In 2024, the number of insolvencies in these sectors in Europe is expected to continue to rise, with the construction sector seeing the largest increase in bankruptcies. The report predicts that by the end of the year, more than 18,000 companies in this sector will go bankrupt in France, 5,000 in Germany, and 2,000 in Italy.

The retail sector remains particularly vulnerable, as consumer patterns and behavior continue to reflect the consequences of digital transformation and increased competition from online stores. In the automotive industry, companies will continue to be under pressure from the transition to electric vehicles, with suppliers tied to internal combustion engines facing significant difficulties.

In China, where the number of bankruptcies has remained relatively low in recent years, the number of insolvencies is expected to increase by five percent in 2025 and by six percent in 2026. Chinese companies, particularly those in the construction and real estate sectors, will continue to be exposed to risks due to economic slowdown and weak growth potential.

Looking ahead, the number of insolvencies worldwide will remain high even after 2024. In North America, the number of bankruptcies will further increase by 12 percent in 2025 before stabilizing in 2026. Similarly, in Europe, the number of bankruptcies is expected to decrease by three percent by 2026 but will still remain at historically high levels.