youth wave bankruptcy cause growth retardation, its delay monetary policy and tightening credit conditions, according to Allianz Research. In particular, it is expected that this year the number of bankruptcies worldwide will increase by 21%. USA increase by 49% compared to 2022 and Eurozone 23%, while the increase is expected bankruptcy Greek companies, which is 23% both this year and in 2024.

Spreading concerns about financial stability have increased risks for enterprises, notes Allianz, and will contribute to the acceleration of bankruptcies everywhere. Recession fears and supply chain problems have eased, but companies continue to face widespread pressure on the profit front amid tightening financial conditions, given the turmoil in banking sector USA and Europe. Moreover, “normalization” is not yet complete, especially in Europe. COVID-19-related measures have largely been lifted, but in some countries companies are still participating in multi-year support programs and have also faced the phasing out of additional support measures introduced after the pandemic. war in Ukraineespecially with regard to energy prices.

Shallow recovery in the EU

Demand is likely to remain well below the minimum needed to at least stabilize bankruptcies, Allianz Research estimates. Global growth is expected to slow in 2023 (+2.2%) and recover slightly in 2024 (+2.3%). The US will not escape recession at the end of 2022, while the Eurozone is expected to recover slightly in 2024 (+0.9%) after a sluggish growth in 2023 (+0.3%).

In most countries, the outlook for GDP dynamics in 2023 and 2024 is below the levels needed to reduce bankruptcies, he stresses. According to his estimates, the Eurozone and the US will need 1.3% and 1.5% additional GDP growth on average in 2023-2024 to stabilize the number of bankruptcies.

Allianz notes that, in addition to demand, continued pressure on profitability, weaker liquidity buffers and tighter financial conditions are testing the resilience of the most vulnerable companies. These include businesses in industries most affected by the global downturn (such as specialty retail such as textiles, home appliances and some services including restaurants), companies in industries most exposed to higher wages (such as retail, transportation and construction), as well as companies. are more exposed to the risk of rising interest rates and rising interest costs (construction, durable goods).

According to an Allianz Research report, the number of bankruptcies in Greece increased by 23% compared to 2022.

Loss of liquidity

High cash buffers provided an important buffer, with non-financial corporate cash cushions well above pandemic levels in the Eurozone (+33% in early 2023 compared to January 2020) and the US (+19% compared to January 2020). However, as Allianz notes, the cash burn rate has turned negative since the first half of 2022 for the US and most European countries, suggesting that this buffer is ending.

Overall, global bankruptcies are expected to rise sharply in 2023 (+21% y/y), followed by another, albeit more limited, increase in 2024 (+4%). Europe is expected to see relatively strong growth in bankruptcies in 2023 (+20%) for the third year in a row and stabilize in 2024, with growth in the euro area expected to be 23% this year. It is estimated that in 2023 the number of bankruptcy cases in France will reach 59,000 (+41% yoy), 28,500 in the UK (+16%), 17,800 in Germany (+22%) and 8,900 in Italy ( +24%. %).

For Greece, Allianz estimates that after two years of stabilization, there will be 65 corporate bankruptcies this year, up 23%, and another 80 in 2024, also up 23%.

The US is expected to grow 49 percent in 2023 with 20,000 total bankruptcies as a result of tighter credit conditions and a sharp economic downturn, with another 23,000 bankruptcies expected in 2024.

In the event of a new systemic crisis like the financial crisis of 2008, there will be 21,600 additional bankruptcies in the US in 2023-24 and 99,900 in Europe. Even in the absence of a major financial crisis, a credit crisis of the magnitude seen in the early 2000s during the bursting technology bubble, will lead to 12,900 additional bankruptcies in 2023-2024 in the US and 95,300 in Europe. And in the event of a “freeze” of credit, that is, a “stop” issuing new loans, the number of bankruptcies will increase by 10,700 in the US and by 46,300 in Europe.