As the German economy grew out of stagnation earlier this year, the number of insolvencies declined in the first six months of 2013. But the recovery remains fragile and so does the situation of companies and consumers.
In the first half of 2013, the number of corporate and private insolvencies in Germany dropped 7.8 percent to 70,000 cases compared with the same period 2012, the German Federal Statistics Office, Destatis, said Friday.
Destatis data showed that one out of five bankruptcy filings - about 13,200 in total - was made by a business entity. With a drop of 10.3 percent, corporate failures declined more significantly than consumer insolvencies, which came in at 45,000 cases.
Christoph Nierig, Chairman of the German Insolvency Administrators' Association (VID), warned against too much optimism, stressing that many German businesses were heavily indebted with depleted capital buffers as a result of the economic crisis.
“Strong competition have led to reduced product margins so that only a mild stagnation will lead to heightened financial risk,” he said in a statement released Friday.
In the second quarter of 2013, the German economy grew out of stagnation earlier in the year, returning to growth at a rate of 0.7 percent. But the upswing in Europe's largest economy was at risk from the budget crisis in the United States and more trouble in the debt-laden eurozone, Nierig said.
The German statisticians also calculated that bankrupt businesses owed creditors a total of 10.4 billion euros ($14 billion), while insolvent consumers were unable to repay a total of 2.4 billion in debt.
uhe/dr (AFP, Reuters, dpa)