The Czech Republic, like many other countries, has been hit by various crises over the past few years, including the COVID-19 pandemic, the Ukraine conflict, energy and inflation crises, and more. Many analysts have predicted a significant increase in bankruptcies and business failures, but so far, the numbers have remained relatively stable.

According to Ondřej Pirohanič of CRIF – Czech Credit Bureau, the number of bankruptcies in the country has been variable in recent years. Before the pandemic, there was a four percent increase in bankruptcies in 2019, followed by a 12 percent drop in 2020. However, in 2021, there was a 23 percent increase, the highest since 2010. But in 2022, the number of bankruptcies dropped by six percent compared to the previous year.

While some well-known brands have recently gone bankrupt, such as Eiffel Optic, Iceland, Dedoles, Hervis Sport, and Orsay, forty new brands entered the country, a third of them fashion brands. Additionally, many new businesses were created in January 2022, with 2,805 new companies founded. However, there was also a high turnover of companies in January, with 1,550 companies going out of business.

Despite the ups and downs in the number of bankruptcies and business closures, the net increase in the number of companies in the Czech Republic has not reached the level of the two years before the pandemic, according to CRIF. Analyst Věra Kameníčková noted that bankruptcies make up only a minor part of the companies and sole traders that have disappeared.

While the number of bankruptcies may not be significantly increasing, there are other concerning trends, such as a deterioration in payment morale among companies. According to the collection agency EOS KSI, the average delay in paying an invoice has increased by two days to 23 days, the first deterioration in payment morale in eight years.

Additionally, the Association for Electronic Commerce reported that online store turnover fell for the first time ever in 2021, down 12 percent year-on-year. More significant reductions are expected in the first half of 2022.

In conclusion, while the number of bankruptcies and business closures in the Czech Republic has remained relatively stable in recent years, there are concerning trends such as a deterioration in payment morale and a decline in online store turnover. It remains to be seen how the country’s economy will fare in the coming months and years.

Article by Prague Forum