The global credit insurer Coface has released its annual insolvency report for Central and Eastern Europe (CEE), painting a nuanced picture of the region’s corporate stability. Although the CEE region saw a strong economic rebound in 2024, the number of bankruptcies continued to climb. Coface notes that, for a second year in a row, Bulgaria stands out as an exception, registering a 5.67% decline in bankruptcies compared to 2023.

In 2024, the CEE region recorded an average GDP growth of 2.6%, a substantial improvement from the 0.8% of the previous year. This upswing was driven by falling inflation, higher real wages, and robust household spending, with Poland, Hungary, and Romania leading the charge. Lower energy costs and better supply chain conditions contributed to a drop in inflation to 4.6% in 2024, down sharply from 11.2% in 2023.

Yet the economic revival did not guarantee business resilience. On the surface, regional bankruptcies fell by 9% – from 50,248 in 2023 to 45,938 in 2024 – but this drop was misleading. Changes to Hungary’s legal framework had artificially suppressed bankruptcy figures. If Hungary is excluded, bankruptcies actually increased by 3%, from 29,771 to 30,680. This trend highlights persistent weaknesses in the region’s corporate sector.

“After the turbulent year of 2023, there was a sense of relief in the air. But companies, particularly in manufacturing and transport, were still reeling from previous crises,” said Mateusz Dadej, regional economist at Coface. “The rise in bankruptcies reveals deeper structural vulnerabilities that have yet to be resolved.”

The 2024 insolvency figures showed varied dynamics across the region. In Bulgaria, the drop in bankruptcies was notable, but the data remains complex and does not paint a uniformly rosy picture of the business climate. German demand, which is crucial for Bulgarian exports, had a dampening effect on some sectors. Industries with significant bankruptcy rates included plastics and rubber production, chemicals, and metal product manufacturing. On the other hand, consumer-focused sectors like textiles and entertainment benefited from higher household consumption, which was driven in part by a roughly 19% increase in Bulgaria’s minimum wage, translating into double-digit real wage growth. This wage surge, however, has eroded companies’ profit margins as operational costs climb, said Plamen Dimitrov, Coface's manager for Bulgaria.

Hungary saw the most dramatic drop in bankruptcies, down by 25.5%, largely due to the normalization of legal processes after the surge in 2022. Serbia and Bulgaria also saw declines, at 12.1% and 5.67% respectively, reflecting more stable macroeconomic conditions. In contrast, bankruptcies surged in Slovenia (32.4%), Latvia (24.6%), Estonia (10.2%), and Croatia (7.3%) – driven by weak domestic demand, rising costs, and structural challenges in construction and trade. Romania also saw a notable 9.4% increase, particularly among medium and large businesses, as inflation and fiscal strains intensified. Poland reported a 19% jump, linked to the use of pandemic-era restructuring procedures to tackle liquidity pressures. Meanwhile, the Czech Republic (1.9% increase), Slovakia (3.5% decrease), and Lithuania (1% decrease) showed relatively stable figures, with most bankruptcies in the construction and retail sectors.

Transport, manufacturing, and construction emerged as the most pressured industries in the region. The transport sector faced reduced freight volumes and sustained cost pressures, while manufacturers grappled with lower orders and a shortage of workers. Construction, already weakened by high interest rates and a cooling housing market, also saw a notable rise in bankruptcies.

Looking ahead to 2025, Coface forecasts a cautiously optimistic outlook. “We expect a modest improvement in insolvency figures next year,” said Mateusz Dadej. “EU funds and household spending will be key drivers, but tighter credit and uncertainties in global trade, including rising tensions between the US and EU, are real risks.”

“The report highlights how legal frameworks, economic trends, and geopolitical uncertainties shape the CEE region’s bankruptcy dynamics,” added Jarek Jaworski, Coface’s CEO for Central and Eastern Europe. “Although growth has resumed, many businesses are still fighting for survival. Clear policies and targeted investments will be crucial for stabilizing the region in the long run.”