EU: Insolvencies rise in Central and Eastern European countries despite recovery

Coface * –

Coface, a global leader in credit insurance and commercial risk management, has published its annual report on insolvencies in Central and Eastern Europe (CEE), revealing a mixed picture: the economy returned to growth in 2024, but business stability continued to deteriorate. Despite slowing inflation and a recovery in GDP, insolvency rates increased in most countries in the region. The CEE region recorded an average GDP growth of 2.6% in 2024, a significant improvement from 0.8% in 2023. The recovery was driven by falling inflation, rising real wages and strong private consumption, particularly in Poland, Hungary and Romania. Inflation fell to 4.6% in 2024, down from 11.2% the previous year, thanks to lower energy prices and improved supply chains. However, this economic recovery did not lead to greater business resilience. At the regional level, insolvencies decreased by 9%, from 50,248 in 2023 to 45,938 in 2024, but the decline is misleading. Regulatory changes in Hungary have distorted the data. Excluding Hungary, insolvencies actually increased from 29,771 in 2023 to 30,680 in 2024 (+3%), highlighting the continued fragility of the region's business landscape.

“After the 2023 tensions, macroeconomic indicators suggested a respite. But many companies, especially in manufacturing and transport, had already suffered too many shocks,” says Mateusz Dadej, Regional Economist Central and Eastern Europe at Coface. “The increase in insolvencies reflects deeper structural problems and the delayed impact of past crises.”

Countries show contrasting insolvency dynamics in 2024. Hungary recorded the strongest decline (–25.5%) due to the normalisation of legal procedures after a transitory increase in 2022, while Serbia and Bulgaria also recorded declines (–12.1% and –5.7%, respectively), thanks to more stable macroeconomic conditions. In contrast, 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, especially in the construction and trade sectors. Romania also recorded a significant increase of 9.4%, mostly among medium-sized and large companies, in a context of high inflation and fiscal imbalances. Poland observed an increase in insolvencies of 19%, largely due to the continued use of restructuring procedures during the pandemic, now widely used to address liquidity problems.

The Czech Republic (+1.9%) and Slovakia (–3.5%) showed relatively stable trends, while Lithuania remained unchanged from the previous year (-1%), with insolvencies concentrated in the construction and retail sectors.

Transport, manufacturing and construction: key sectors under pressure. Several key sectors were particularly vulnerable. Transport was hit by falling freight volumes and persistent cost pressures. Manufacturing struggled with falling order volumes and labor shortages, while construction was hit by rising interest rates and falling investment, particularly in residential projects. Each recorded above-average increases in default rates.

Outlook 2025: Cautious optimism, supported by investments. “We expect a modest improvement in the insolvency landscape in 2025,” said Mateusz Dadej. “The delayed release of EU funds and the recovery of household consumption will be key. However, tight credit conditions and uncertainties on global trade, in particular the escalation of US-EU trade tensions, pose a substantial risk to our outlook.” “Coface’s report provides a comprehensive analysis of how the legal framework, economic conditions and geopolitical risks are influencing insolvency dynamics in the Central and Eastern Europe region,” added Jarek Jaworski, Regional CEO for Central and Eastern Europe at Coface. “Despite the recovery, many companies are still struggling to survive. Continued investment and clear policies will be key to ensuring long-term stability.”

“The data emerging from our report on insolvencies in Central and Eastern Europe confirm that the economic recovery recorded in 2024 was not sufficient to strengthen the stability of the region's business fabric,” comments Ernesto De Martinis, CEO of the Mediterranean & Africa Region at Coface. “The picture remains fragmented, with signs of vulnerability in several key sectors such as construction, transport and manufacturing, and strong differences between countries. In a context still exposed to macroeconomic risks and geopolitical tensions, our role is to support companies in monitoring risk and adopting preventive strategies to protect business continuity.”