Despite economic recovery, the number of insolvencies has increased in the Central and Eastern European region

The Central and Eastern European region has gained momentum in the past year: in 2024, average GDP growth was 2.6 percent year-on-year, compared to a surplus of 0.8 percent in 2023. The recovery was supported by falling inflation, rising real wages and strong consumer spending, especially in Poland, Hungary and Romania. Inflation has fallen from 11.2 percent in the previous year to 4.6 percent in 2024, thanks to lower energy prices and improving supply chain conditions, according to the latest analysis by international credit insurer Coface, which also describes the development of insolvency proceedings, which greatly affect the performance of the corporate sector.

The region is vulnerable

According to Coface analysts, however, the economic recovery has not translated into an improvement in the resilience of businesses. The number of bankruptcies at the regional level fell by 9%, from 50,248 to 45,938 between 2023 and 2024, but this decrease may be misleading. Hungarian legislative changes distort the figures. Excluding the Hungarian figures, the number of insolvencies actually increased, from 29,771 in 2023 to 30,680 in 2024 (+3%), indicating the persistent vulnerability of the region’s business environment.

“After a turbulent year in 2023, macroeconomic indicators pointed to a recovery. But many companies, especially in the manufacturing and transport sectors, have already taken too many hits. The increase in insolvencies reflects deeper structural problems and the lagged impact of previous crises,” said Mateusz Dadej, Coface’s Chief Economist for Central and Eastern Europe.

Countries show different insolvency dynamics in 2024

Hungary registered the most marked decrease, more than 25 percent, due to the change in legal regulations following the temporary swing in 2022, and the high values ​​in 2023 also played a role in the decrease. It is important to mention that the change occurred in the second half of 2022, but the effect became visible in 2023. In that year, the appearance of a new technical element related to forced cancellations and the change in the kata also influenced the results, but we should not forget the carryover effect of company closures postponed during the pandemic into 2023.

Returning to the recent figures from last year: in addition to Hungary, Serbia and Bulgaria also showed a decrease (-12.1 percent and -5.7 percent, respectively), which is due to the more stable macroeconomic environment. In contrast, insolvencies increased significantly in Slovenia (+32.4%), Latvia (+24.6%), Estonia (+10.2%) and Croatia (+7.3%), driven by weak domestic demand, rising costs and structural challenges, particularly in construction and trade. Romania also experienced a significant increase of 9.4%, mainly among medium-sized and large companies, driven by high inflation and fiscal imbalances. Poland reported a 19% increase in insolvencies, largely due to the now widely used restructuring procedures introduced during the pandemic to address liquidity problems. Meanwhile, the Czech Republic (+1.9 percent) and Slovakia (-3.5 percent) showed a relatively stable trend, while Lithuania remained unchanged from the previous year (-1%), where insolvencies were primarily concentrated in the construction industry and retail trade.