Coface, rising insolvent companies in Central and Eastern Europe

(Il Sole 24 Ore Radiocor) - The economy returned to growth in Central and Eastern Europe in 2024, but business stability continued to deteriorate. Despite slowing inflation and recovering GDP, insolvency rates have increased in most countries of the region. This is the picture that emerges from the annual report "Cee Insolvencies" produced by Coface, one of the world leaders in credit insurance and commercial risk management.

Last year, the CEE region (Central and Eastern Europe) recorded average GDP growth of 2.6%, up from 0.8% in 2023, driven by a drop in inflation, rising real wages and strong private consumption, particularly in Poland, Hungary and Romania. Inflation fell to 4.6% in 2024, from 11.2% the year before, due to lower energy prices and improved supply chains.

"However, this economic recovery has not led to greater business resilience," the report highlights. "Regionally, insolvencies decreased by 9 per cent from 50,248 in 2023 to 45,938 in 2024, but the decrease is misleading," as, "regulatory changes in Hungary skewed the data." Excluding Hungary, in fact, the insolvencies actually increased from 29,771 in 2023 to 30,680 in 2024 (+3%).

"After the tensions of 2023, macroeconomic indicators suggested a respite. But many companies, especially in manufacturing and transport, had already suffered too many shocks," comments Mateusz Dadej, economist for Coface's Central and Eastern Europe Region. "The increase in insolvencies reflects deeper structural problems and the delayed impact of past crises".

Hungary recorded the sharpest decline (-25.5%), following the normalisation of legal procedures after a transitional increase in 2022. Serbia (-12.1%) and Bulgaria (-5.7%) also declined, thanks to more stable macroeconomic conditions. On the contrary, insolvencies increased significantly in Slovenia (+32.4%), Latvia (+24.6%), Estonia (+10.2%) and Croatia (+7.3%), due to weak domestic demand, soaring costs and structural challenges, particularly in the construction and trade sectors. Romania reported a 9.4% increase, especially among medium and large enterprises, in a context of high inflation and fiscal imbalances. InPoland the increase was 19%, largely due to the continued use of restructuring procedures during the pandemic, now widely used to manage liquidity problems. Czech Republic (+1.9%) and Slovakia (-3.5%) had less significant movements, while Lithuania remained virtually stable compared to the previous year (-1%), with insolvencies concentrated in the construction and retail sectors.