Global Corporate Bankruptcies Forecasted to Rise 6% in 2025 Amid Persistent Economic Headwinds

A stark warning from a social media user, "250K Ain't Enough," stating "Consolidation and closures on the way," reflects a sentiment increasingly echoed by economic forecasts for 2025. Businesses worldwide are bracing for continued financial turbulence, with projections indicating a sustained rise in corporate bankruptcies and strategic consolidations driven by a complex interplay of macroeconomic pressures.

Global business bankruptcies are anticipated to increase by another 6% in 2025, following a significant 10% surge in 2024, according to Allianz Trade. This marks a five-year upward trend in insolvencies, pushing figures well above pre-pandemic levels in many advanced economies. The primary culprits behind this wave of distress include elevated interest rates, persistent inflation, and rising labor costs, which continue to squeeze profit margins across various sectors.

Several industries are particularly vulnerable to these economic pressures. The consumer goods and services sector, encompassing retail and casual dining, has been severely impacted by weakening consumer spending and shrinking discretionary incomes. PwC reports that store closures outnumbered openings in 2024 for the first time since 2021, with notable bankruptcies in chains like TGI Friday’s and Red Lobster. The healthcare sector also faces significant challenges, with bankruptcies in 2023-2024 reportedly 75% higher than in previous years, primarily due to inflation and reimbursement rate pressures.

The commercial real estate market continues to experience prolonged distress, with high office vacancy rates and the impact of elevated interest rates on property valuations contributing to a substantial portion of Chapter 11 filings. Additionally, the automotive industry, particularly parts suppliers, is grappling with broader financial difficulties. Dun & Bradstreet's analysis highlights that 65% of tracked economies saw an increase in corporate bankruptcies in 2024, a trend expected to persist into 2025 as underlying financial strains deepen.

Despite the rise in closures, the M&A landscape presents a mixed picture. While global deal volumes saw a 25% decline in the first half of 2024, deal values have remained resilient, increasing by 5% globally, largely due to strategic megadeals. Reports from PwC and McKinsey suggest a potential resurgence in M&A activity in late 2024 and 2025, driven by pent-up demand, ample private equity capital, and corporates seeking inorganic growth and business reinvention in a low-growth environment. This includes an expected uptick in distressed M&A, offering opportunities for acquisitive companies to fill gaps in competencies and geographies. The dual trends of consolidation and closures underscore a period of significant market rebalancing and adaptation.