Financial experts fear the number of corporate bankruptcies in Germany could soar again due to slower economic growth and rising interest rates. Manfred Stamer, senior economist at Euler Hermes, a credit insurer, said the number of bankruptcies in 2018 has already increased among construction and service providers. For 2019, the industries most at risk of businesses closing are transport, textile, metal and energy, Franffurter Allgemeine, a German newspaper, reported.
Mr Stamer also noted increasing risks in major export markets such as the UK, France, China and the United States.
According to Euler Hermes, after nine years of decline, company insolvencies could stabilise initially, but the possibility of rising insolvency numbers cannot be ruled out from 2020 onwards, it said.
In addition to the slowdown in economic growth, the prediction comes amid concerns over the prospect of rising interest rates on the credit market.
However, credit agency Creditreform expects a slight increase in 2019 for the first time in years with the positive trend of declining corporate bankruptcies drawing to a close.
The agency predicts an increase in corporate insolvencies by about 100 cases to 20,000 in the coming year.
Despite more companies facing bankruptcy, the experts pointed out that many firms did not stop their business in spite of being in the red.
Creditreform also anticipates an increase of 500 bankruptcies to 24,000 in other cases of insolvencies, such as of associations.
In the case of so-called consumer bankruptcies, however, the credit agency expects a further decline of about 2,600 cases to 66,000.
This means only a slight decline in the total number of bankruptcies by around 2,000 to around 110,000 cases.
As early as 2018, the decline in corporate insolvencies had weakened considerably compared to previous years.
Company insolvencies in 2018 were down only 1.2 percent to 19,900 cases.
In 2018, around 198,000 jobs were lost through bankruptcy.
Last month the German economy was reported to have dropped for the first time in three years, having last declined in the first quarter of 2015.
Gross domestic product (GDP) contracted in the third quarter compared to the previous quarter by 0.2 percent, according to the Federal Statistical Office.
Published at Wed, 26 Dec 2018 21:06:00 +0000