The number of corporate insolvencies in the DACH region is rising. In the first half of 2024; German local courts reported 8;571 corporate insolvencies; an increase of 16.2% compared to the previous year. Small and medium-sized enterprises are particularly affected; suffering from rising costs and sluggish consumer demand. It is expected that around 20;000 companies will be insolvent by the end of the year.
Purchasing Managers' Index: A mixed picture
However; the latest figures from the Purchasing Managers' Index show that there is light at the end of the tunnel. In June 2024; the index returned to growth at just over 50 points. However; in July it fell back to 48.7 points; below the growth threshold. What the index reveals: The manufacturing sector in particular is suffering from conditions such as high energy costs; a shortage of skilled workers and deglobalisation. At 42.6 points; the index is well below the growth threshold of 50; while the service sector is showing moderate growth at 52 points.
Four major disruptions: challenges for the future
In addition to the immediate economic difficulties; the countries in the DACH region are facing four major disruptions:
- Digitalisation: Rapid technological progress requires massive investment in digital infrastructure and skills. This includes investment in artificial intelligence; but also in the automation of production.
- Decarbonisation: The transition to a carbon-neutral economy places high demands on companies and governments. Although the issue has taken a back seat somewhat in light of the current crises; the demands on companies are continuously increasing.
- Demographic change: Companies are already facing a shortage of skilled workers. Currently; 470;000 positions are unfilled. With the baby boomers retiring from working life; the shortage of skilled workers will become even more acute.
- De-globalisation: Disruptions to trade routes; customs duties; weak growth rates in China; etc. have a direct impact on the local export-oriented economy. Diversification is ongoing.
Challenges and opportunities at the same time
The challenges we currently face are manifold. But the crisis also presents opportunities for companies. Opportunities to drive forward digitalisation and automation. This will compensate for the shortage of skilled workers and reduce costs in the long term. It will also enable new business models to be developed.
At ERA Group; we have been supporting companies worldwide with these challenges since 1992 with our implementation-oriented consulting services. Contact us! We can help you too.
