Allianz study: Significant increase in corporate bankruptcies around the world

The credit insurer Allianz Trade expects a strong increase in corporate insolvencies in the coming year - all over the world and also in Germany.

The number of these bankruptcies is likely to increase by 10 percent this year and even by 19 percent in 2023, according to the study published on Thursday.

The energy crisis, the threat of recession, high price increases and rising interest rates plus disrupted supply chains put companies under pressure.

In Germany, the increase of 5 percent this year and a further 17 percent in the coming year to 17,150 cases should be comparatively moderate - coming from a low level.

“In 2023, global insolvencies should roughly reach the level before the pandemic,” said Milo Bogaerts, head of Allianz Trade in Germany, Austria and Switzerland: “Germany is comparatively robust in an international comparison.” However, this country is also showing itself a noticeable increase again for the first time.

According to the information, in addition to Germany, the USA, China, Italy and Brazil have also recorded a persistently low level of insolvency.

In most countries, however, the turnaround has already taken place - especially in important European markets such as Great Britain, France, Spain, the Netherlands, Belgium and Switzerland.

"Increasing bankruptcies are already a reality in most countries," said Allianz Trade chief bankruptcy analyst Maxime Lemerle. "The key European markets account for two-thirds of the increase."

With high energy costs, rising interest rates and wages, companies were hit by three shocks to profitability.

Margins are already under pressure.

"According to our calculations, German companies can compensate for an average price increase of up to 50 percent if they manage to pass on about a quarter of the energy price increase to their customers," said Bogaerts.

"Everything above that is at the expense of profits." The mix of higher financing and wage costs with the simultaneous economic downturn has hit some sectors particularly hard.

Allianz Trade considers the construction, transport, telecommunications, mechanical and plant engineering, retail, white goods, electronics, automotive and textile industries to be most at risk.