Insolvencies in Portugal are expected to grow by 19% in 2024 and 10% in 2025

Allianz Trade releases its latest Global Insolvency Report this Wednesday and reveals updated forecasts for 2024 and 2025. According to the world's leading credit insurer, after two gradual recoveries in 2022 (+1%) and 2023 (+7%), global insolvencies are set to accelerate again in 2024 (+9%) before stabilizing in 2025 (0%) at high levels

Services, construction, retail and textiles are expected to continue to be the most affected sectors in 2024 in Portugal.

Portugal has successfully maintained a low level of cases until 2022, with less than 2,000 cases annually, marking the lowest level in 15 years. Insolvencies observed between 2020 and 2022 were reduced in several countries due to State support for companies in the Covid-19 pandemic scenario. Compared to 2016-2019 levels, it is possible to see that, between 2020 and 2022, support measures saved the equivalent of three quarters of insolvencies in countries such as the USA, Germany, Austria, Norway, Portugal and New Zealand. In this context, a "normalization" was expected in 2023 with the end of support measures in some countries and in a scenario of weaker global demand, prolonged pressure on profitability due to increased production and financing costs.

The economic slowdown in 2023 has already resulted in a reversal of the upward trend in corporate insolvencies (+14% y/y). This particularly affected SMEs, namely in services, construction, retail and textiles, which continued to be the four most affected sectors – together representing 60% of all insolvencies. Allianz Trade predicts that the continuation of fragile economic dynamics could continue to put pressure on the most vulnerable companies, leading to a continued increase in corporate insolvencies in 2024 and 2025 (+19% annually and +10%, respectively), reaching levels slightly higher than those observed before the pandemic.

Insolvencies are (already) above pre-pandemic levels in most advanced economies.

As expected, 2023 saw a rapid and broad recovery in corporate insolvencies, and 2024 began with insolvencies above pre-pandemic levels in most of the most developed economies.

Last year, the number of company insolvencies recovered in every third country out of four, with the majority recording a double-digit increase. We saw sharp increases in the US (+40% in 2023) and the Eurozone (+14%), with the Netherlands (+52%), France (+35%) and Germany (+23%) in line from the front.