The year 2024 brought increasing economic pressures on companies in Romania, which faced a tense global context, internal fiscal volatility, and a sharp decline in consumption. All these factors contributed to an increased risk of insolvency among active firms.

According to data analyzed by Coface Romania, in 2024 there were 7,274 new insolvency procedures recorded, up from 6,650 in 2023. This development represents an increase of over 9%, serving as a warning sign of the local economic system’s vulnerability to both external and internal shocks.

The impact of the international context on Romania’s economy

The continuation of the military conflict in Ukraine and the de-escalation of tensions in the Middle East in 2024 generated a climate of geopolitical uncertainty that contributed to the slowdown of the European economy, especially in Germany, Romania’s main trading partner.

The technical recession of the German economy affected supply chains and demand for products and services from Central and Eastern Europe, amplifying negative effects on export-dependent economies such as Romania.

Domestic developments: weak economic growth, high inflation and fiscal deficit

Domestically, Romania’s economy recorded modest growth of around 1% in 2024, down from about 2.4% in 2023. This slowdown was driven by a mix of factors, including high inflation, increased financing costs, and a reduction in consumer spending. Inflation reached approximately 5.1% in December 2024, and lending costs for companies rose significantly.

Meanwhile, the fiscal deficit reached a concerning level of around 8.6% of GDP, compared to about 5.7% in the previous year. These macroeconomic imbalances create additional uncertainty and increase pressure on companies, especially those operating with low profit margins or in sectors vulnerable to demand fluctuations.

In this context, small and medium-sized enterprises, already vulnerable to financial imbalances, were the most exposed to insolvency risk.

The most affected sectors by the increase in insolvencies

According to the Coface Romania study on the sectoral distribution of insolvencies, the most affected branches of the economy are wholesale and retail trade, including the repair of motor vehicles and motorcycles, where 1,927 insolvency procedures were recorded in 2024. This sector continues to be the most exposed, given the decline in consumption and significantly extended payment terms.

In second place is the construction sector, with 1,510 companies entering insolvency, followed by the manufacturing industry in third place with 860 cases.

Together, these three sectors account for approximately 60% of all insolvency procedures initiated in Romania in 2024, confirming the significant economic pressure exerted on these areas.

Cabot’s recommendation: adapting the business to the economic challenges of 2025

To cope with this difficult context, companies need to strengthen liquidity, optimize costs, and diversify their client and supplier portfolios. At the same time, working with tax and financial specialists can help prevent the imbalances that lead to insolvency, and a strategic approach, adaptable to market changes, is essential for survival and recovery.

Cabot Transfer Pricing recommends that companies adopt strong fiscal and financial risk management strategies in advance.

Strengthening tax documentation, cost optimization, and preparing for possible audits are essential measures to protect the business in 2025.

The Cabot team is here to support you in successfully facing the new challenges.