A stable economy with rising incomes and growing employment has no doubt contributed to this, as have the improved quality of corporate balance sheets, falling interest rates and a good supply of credit from the banking sector. Since the beginning of 2018, however, manufacturing in Germany has been experiencing a general decline. Though booming construction activity and robust consumption have so far largely made up for this, the crisis in manufacturing could spread to the economy as a whole and this could drive the number of corporate insolvencies up again. This article therefore analyses the impact of a slowdown in GDP growth on the number of insolvencies in Germany. It is shown that only a sharp economic slump of more than 1 per cent would cause insolvency figures to rise. The current high quality of corporate balance sheets is a factor that makes a reversal of the present downward trend in insolvencies unlikely – even if the economy stagnates in 2020.
Corporate Insolvencies in Germany – Will the Trend Be Reversed?
The number of corporate insolvencies in Germany has been falling for the past 16 years, interrupted only briefly by the fallout from the global financial market and economic crisis of 2008/2009.
- Klaus-Heiner Röhl / Gerit Vogt ·
- IW-Trends No. 4 ·
- 19 December 2019