The number of bankruptcies of German companies continues to increase

Recently, the situation of German corporate bankruptcies has continued to rise. Credit insurance company Allianz Trade has released a research report on Allianz Trade Bankruptcy, stating that the number of German corporate bankruptcies will continue to increase in 2024.

The report shows that sustained economic weakness, structural challenges, and tightening financing conditions are likely to lead to more German companies falling into financial difficulties in 2024. The report predicts that the number of German corporate bankruptcies in 2024 may increase by 13% compared to the previous year Compared to the second half of 2022, the number of bankruptcies of German companies in the second half of 2023 has significantly accelerated, increasing by 25%. Among them, the hotel industry, retail industry, construction industry, and B2B service industry have more bankruptcies.

It is expected that by 2024, the number of German corporate bankruptcies will increase to approximately 20260. By 2025, due to the expected recovery of the German economy, this number will remain stable at a level slightly below 20000. Analysts say that slowing economic growth, trade disruptions, and geopolitical uncertainty are key factors contributing to this situation. The German economy faces many challenges, including weak external demand, sluggish consumer spending, and suppressed domestic investment.

Renowned German companies have repeatedly announced layoffs. Data shows that from January to November 2023, German district courts reported a total of 16264 corporate bankruptcy cases, a year-on-year increase of 23.2%. In November 2023, 4.5 out of every 10000 companies in Germany went bankrupt. Economist Muller from the Haller Institute of Economics in Germany said that the number of bankruptcies of German companies is expected to further increase in the coming months.

NIM consumer expert Rolf Bickel said that consumers are very uneasy. In addition to the continuous rise in prices, the weak economic forecast for Germany this year may also be an important reason. Recently, the economic outlook in Germany has become increasingly pessimistic. The German government has also lowered its economic growth forecast for Germany in 2024 from the previous 1.3% to 0.2%.

For many years, Germany has been the leader of the European economy and holds an important position in the global economy. However, now Germany has become a laggard in economic development. Some analysts point out that after the escalation of the Ukraine crisis, Germany announced the abandonment of using Russian natural gas, leading to a surge in energy prices, which is a heavy blow to German industry. From the perspective of Germany's industrial structure, manufacturing industries such as automobiles, machinery, and chemicals are its economic pillars, which means that compared to other major economies in Europe with strong service industries, the German economy is more susceptible to the impact of rising energy prices on industrial production and investment and financing. Some key industrial sectors in Germany are facing difficulties in transformation, such as traditional automotive companies transitioning to electric vehicles. Due to rising energy prices, companies in the chemical industry are struggling.

Germany is an export-oriented country mainly focused on manufacturing, and its excellent performance in the traditional industrial sector masks its insufficient investment in new industries. The current sluggish demand in overseas markets will inevitably affect the economy for German companies. Replacing Japan as the world's third largest economy by Germany does not necessarily mean that Germany's economy is better than Japan's, mainly due to the sharp decline in the exchange rate of the Japanese yen against the US dollar. Although Germany has made some progress on the global economic stage, its economic development still faces challenges.