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Thursday, December 7, 2023

Germany again fears a wave of corporate bankruptcies

Ten members of the European Union are expected to face an economic downturn this year. For the remaining seventeen, even in times of crisis, the gross domestic product will increase. The situation should be significantly better next year. The economic downturn will affect only one member state. In 2025, all members of the European Union will grow. This is how analysts working for the European Commission see future developments.

Slovakia should be doing relatively well. This year’s GDP growth will be the tenth highest, next year’s the fourteenth, and in 2025 the country will occupy the sixteenth position. Expressed in numbers, GDP will rise by 1.4 percent, 1.7 percent and 2.0 percent. But the key word will be the export of domestic companies. Most of the products labeled Made in Slovakia go to Germany. It is in the largest European economy that more and more companies are worried about bankruptcy.

Central banks versus firms

The fear of forced termination of business is analyzed by the German economic institute Ifo. According to his data, in the country from January to October 2023, the number of companies seriously worried about bankruptcy increased from 4.8 to 6.8 percent. There are differences between individual sectors. Every tenth entrepreneur working in retail is afraid of the collapse of his company. Since the onset of inflation, Germans have been saving heavily. 8.9 percent of companies expect difficulties in the construction sector. Problems are mainly caused by the increasingly expensive financing of construction due to rising interest rates. Huge differences can also be seen depending on the size of the company. Bankruptcy is feared by up to 16.5 percent of small companies and self-employed people. It is eight percent for medium and only three percent for large ones.

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