Fault lines in the global and local economy: The wave of bankruptcies and the test of resilience

Since the beginning of the 2020s, the world economy has been going through a multi-layered "polycrisis" process in which the pandemic, geopolitical tensions, supply chain disruptions, and a hyperinflation spiral are intertwined. The relatively stagnant outlook of 2024, shaped by a "wait and see" approach, has given way to a harsher reality as of 2025; a "corporate liquidation wave" that has become evident on a global scale has become the new determinant of the economy.

With the end of the era of cheap liquidity and the persistence of a high-interest-rate environment, a "time of reckoning" has effectively begun for businesses with weak capital structures and limited debt-servicing capacity. Indeed, in this conjuncture, which the IMF and the World Bank have also pointed to, global trade is losing momentum while bankruptcy statistics have climbed to their highest level in the last decade. According to Dun & Bradstreet's 2025 Global Bankruptcy Report, while bankruptcies worldwide increased by 7%, this rate reached 29% in Turkey, with a total of 573 companies seen to have gone bankrupt. In the report, which examined 45 countries, an increase was observed in 28 countries, and it is noteworthy that Turkey's rate of increase is significantly above the world average.

Another risk line deepening this fragile ground is taking shape on the geopolitical front. The tension concentrated on the US–Israel–Iran axis is not just a regional crisis, but a systemic risk factor for the global economic order. The fact that even the possibility of the closure of the straits is reflected in pricing carries the potential to create a new shock wave through energy costs; this increases inflationary pressures while creating direct pressure on corporate balance sheets and cash flows.

As a result, in this period where accumulated global vulnerabilities are now becoming visible through bankruptcies, the deterioration in energy prices and financing conditions affects not only weak businesses but also healthy firms with narrowing access to finance. In the case of Turkey, this process, combined with structural vulnerabilities, a liquidity crunch, and a deteriorating payment chain, points to a deeper divergence in the real sector, showing that what is being experienced is a multi-dimensional threshold that tests economic resilience rather than a temporary fluctuation.

BANKRUPTCY STORM IN THE WORLD ECONOMY: Is This the End of Zombie Companies?

As of 2025, the increase in bankruptcies observed in the global economy is moving beyond cyclical fluctuations and giving strong signals of a structural transformation. The 2025 Global Bankruptcy Index, based on data from AllianzTrade and Dun & Bradstreet, reveals that a "delayed liquidation" process has clearly been activated in the global economy. For "zombie companies" that survived for many years thanks to low interest rates and abundant liquidity conditions but could not produce sustainable productivity, this period is a threshold where a postponed necessity has been put into practice.

The global bankruptcy increase, which was at the 9% level in 2024, rose to the 12–18% band in 2025, making the risk of a "hard landing" in economic activity more visible. Regional breakdowns clearly reveal the prevalence and depth of this trend. In the Eurozone, the weakening in industrial production, especially led by Germany and France, and high energy costs have created intense pressure on SMEs, and bankruptcies have increased by 15%. In the United States, despite the FED's interest rate cut process, the fragility in the commercial real estate market and the slowdown in consumer spending have pushed Chapter 11 (bankruptcy protection) filings 11% higher compared to 2024. On the Asia-Pacific front, the real estate crisis in China and local government indebtedness have created pressure spreading across the region through supply chains, pushing bankruptcy rates to double-digit levels for the first time.

The dynamics triggering these developments are too multi-layered to be reduced to a single cause. The permanent increase in financing costs, the high level of energy and input prices, and the restructuring process in supply chains are combining to create a "perfect storm" effect on a global scale. In this process, the trends of companies moving their production or supply activities from distant countries to geographically closer countries (near-shoring) and companies directing their production and supply processes to politically and economically reliable-allied countries (friend-shoring) are reshaping the global production and supply map, while pushing firms with weak cost, scale, and adaptation capacity out of the system. At this point, the defining axis of competition is no longer just size, but the capacity to adapt to the changing global production architecture.

DEEPENING FRACTURE IN THE TURKISH ECONOMY: Bankruptcies and the Concordat Spiral

The bankruptcy wave accelerating on a global scale is being felt more clearly and more harshly in Turkey. The data points to an erosion in the entire company ecosystem rather than a simple slowdown. According to Dun & Bradstreet/CRIF data, the fact that corporate bankruptcies, which increased by 23% in 2024, rose to 29% in 2025 to reach 573, clearly reveals that the process is not coincidental but a fracture that has gained continuity. This increase reflects not only the number of closing firms but also the weakening in the resilience capacity of the real sector. Indeed, the same report directly links this trend to the high real interest rate environment, difficulties in accessing credit, and tight financial conditions.

Another critical element completing this picture is the deterioration in company demographics. TOBB data indicates that the acceleration of closures despite a limited decline in the number of newly established companies shows that economic dynamism is weakening. In other words, the economy is not only losing its existing businesses; it is also losing momentum in its capacity to produce new ventures. This trend brings with it the risk of a narrowing of the production structure and an erosion of competitiveness in the medium term.

The increase in concordat applications, which is one step before bankruptcy, shows that the pressure has not yet fully reflected in the results, but is rapidly deepening. Applications concentrated especially in labor-intensive sectors sensitive to domestic demand, such as textiles, construction, and furniture, reveal that the problem is not sectoral but systemic.

The main factor distinguishing Turkey from similar economies is the weight of structural vulnerabilities. High real interest rates and the contraction in access to credit limit businesses' access to finance, while the tight monetary policy implemented within the scope of the fight against inflation creates direct liquidity pressure on the real sector. This pressure is felt more sharply, especially in SMEs dependent on working capital.

On the other hand, the production structure with high dependence on imported inputs rapidly reflects exchange rate movements into costs, while the weakening in domestic demand narrows the cash flow of companies. The picture that emerges for businesses squeezed simultaneously from revenue and cost channels points to a distinct "cash flow crisis" rather than a classic recession.

The most critical breaking point of the process is occurring in the payment chain. The extension of collection periods and the increase in delayed payments create a chain-reaction liquidity pressure among firms; a problem that starts in one business can quickly spread to the entire sector. For this reason, reading the current picture only through the number of bankrupt companies is insufficient. When deteriorating payment discipline, narrowing financing opportunities, and weakening demand conditions are evaluated together, it is seen that the problem has spread to a wider ground. Because bankruptcy is a final result; payment delays give early signals of the process leading to this result.

As emphasized in the Dun & Bradstreet report, the increase in bankruptcies in Turkey is a result of not only financial conditions but also limited resistance capacity against external shocks. Volatility in global energy markets and geopolitical risks create additional pressure on already squeezed real sector balance sheets, accelerating the process.

This picture emerging in the Turkish economy has gone beyond a temporary fluctuation. The multi-layered pressure facing the real sector points to a critical threshold that directly tests the resilience of the economic system.

THE SPILLOVER EFFECT OF BANKRUPTCIES: How is the Economic System Under Pressure?

Corporate bankruptcies and closures can create a misleading perception of calm when evaluated as individual firm stories. However, when viewed from the perspective of the economic system, this process turns into a multi-layered fracture mechanism that produces chain reactions. Each bankruptcy means not only a balance sheet closure but also the formation of a new tension line in the supply chain, employment, and the financial system.

The production and supply chain is the first and most rapidly affected area of this fracture. Contractions experienced especially in main industrial firms spread rapidly to the sub-industry and subcontractor networks; this creates an erosion in production capacity that is not visible but felt. In this context, the risk of a decline in the 5–7% band in capacity utilization rates in the medium term is considered not just a theoretical possibility, but a natural extension of the current trend.

The pressure on the financial system is progressing more quietly but more deeply. The expected increase in non-performing loan (NPL) ratios limits the risk appetite of the banking sector, leading to a contraction of the credit channel. This creates a mutual "cautious stance cycle" between the real sector and the financial sector, further slowing down economic activity. The weakening of the credit mechanism creates a critical bottleneck, especially for firms dependent on working capital.

When viewed in terms of the investment climate, the picture presents a more cautious outlook. In an economic environment where bankruptcies and concordat processes are concentrated, both domestic and foreign investors move to a "wait-and-see" position, which causes a slowdown in foreign direct capital inflows. This slowdown delays not only capital flows but also technology transfer and production modernization processes.

The fragility concentrated especially in the construction, retail, accommodation, and service sectors shows that the economic contraction has a systemic, not sectoral, character. These sectors, as the areas that react most quickly to both demand shocks and financing costs, are at the center of total economic fragility. Therefore, the phenomenon of bankruptcy is no longer just a natural part of the economic cycle; it is an indicator where structural pressures become visible.

This picture, which emerges in the short and medium term, creates a pressure area that will directly affect the quality of economic growth. If this pressure is not managed correctly, temporary slowdowns carry the risk of turning into permanent structural losses.

THE SOCIAL COST OF BANKRUPTCY: Unemployment, Income Loss, and Fragility

Economic indicators are often expressed in numbers; however, the social equivalent of these numbers produces a much deeper and more directly felt reality. Corporate bankruptcies and closures directly affect not only production and financing balances but also the employment structure and the level of social welfare. For this reason, the issue should be evaluated as a matter of social transformation, beyond being a technical economic topic.

Employment loss is the most visible result of this process. The increase in company closures increases unemployment pressure, especially in labor-intensive sectors, and creates an upward effect on broad-based unemployment rates. 2025 projections show that this pressure carries the potential for an additional increase of 2–3 points. This is not just a statistical change; it is a transformation that produces chain effects on household incomes and consumption behaviors.

When viewed in terms of income distribution, the picture is more fragile. Every closing business means not only the weakening of a production unit but also the weakening of the economic resilience of the middle class. Mass layoffs, especially concentrated in industrial cities, disrupt social balance on a local scale and deepen income inequality. This creates an additional financial burden on local governments in terms of social assistance and employment support.

Regional development dynamics are also directly affected by this process. The production slowdown and firm closures experienced in newly developing industrial zones carry the risk of causing regional development disparities to widen again. This means a critical setback in terms of the balanced development goal that has been tried to be created for many years.

Therefore, economic contraction is not limited to macro indicators; it produces a multi-dimensional effect that directly permeates the social structure. This effect reshapes a wide area from income distribution to employment, from regional balances to social welfare.

THE LOAD-BEARING COLUMN OF THE ECONOMY: Silent Collapse in SMEs

The production and employment structure of the Turkish economy is largely built on SMEs. For this reason, every type of fracture experienced in the real sector finds its response in this area most quickly and harshly. When bankruptcy and closure data as of 2025 are examined, it is clearly seen that the process is concentrated mainly in small and medium-sized enterprises. This reveals that the crisis produces a scale-based fragility, not a sectoral one.

The main problem of SMEs is that they structurally have a limited equity structure. This structure, based on a growth-by-debt model, is extremely sensitive to the increase in interest rates. This model, which seems sustainable in the era of cheap financing, becomes rapidly fragile in a high-interest-rate environment, leaving businesses open to cash flow shocks. For this reason, the bankruptcy wave being experienced is largely a delayed reflection of the increase in financing costs.

In addition to this, a significant portion of SMEs has a limited profile in terms of corporate risk management, financial planning, and productivity-oriented transformation capacity. OECD data also reveals that the digitalization and productivity levels of SMEs in Turkey are lower compared to their international competitors. This further weakens their resilience during crisis periods.

Businesses that are not integrated with exports and work dependent on the domestic market are directly affected by the contraction in demand. While the weakening in domestic demand makes the revenue streams of these firms fragile, rising costs rapidly erode profitability. This dual pressure creates a structure that squeezes SMEs from both the revenue and cost sides at the same time.

This dissolution in the SME segment is not just a firm-based problem; it points to a structural crack in the production backbone of the Turkish economy. As this crack deepens, the sustainability of economic growth is also directly at risk.

CONCLUSION: The Necessity of Resilience as Fragility Deepens

The picture that emerges today is a common reflection of not only increasing bankruptcies but also a weakening production structure, a deteriorating payment chain, and narrowing economic dynamism. Globally tightening financing conditions and increasing geopolitical risks make structural vulnerabilities in Turkey more visible and more effective. The real risk is not the number of bankrupt companies, but the rapid increase in businesses struggling to survive.

The increase in corporate bankruptcies, the concentration in concordat applications, and the deterioration in payment discipline point to a process that tests the general resilience of the system, beyond ordinary economic fluctuations. At this point, the fundamental question has changed: It is not "How many companies went bankrupt?" but "To what extent can the economic structure absorb shocks?"

In this new conjuncture, the focus of policy design should be on selective mechanisms that protect production capacity and prioritize productivity, rather than widespread and indiscriminate support. Trying to keep every firm alive in an environment where resources are limited weakens economic efficiency in the long run. For this reason, financing policies should be directed toward businesses with high export capacity, potential for technology production, and strong employment impact.

Furthermore, structural transformations that encourage scaling up in the SME ecosystem are inevitable. Instead of a fragmented and fragile structure, supporting corporate scales strengthened by mergers and acquisitions will increase competitiveness. Likewise, legal regulations that will provide speed and predictability in bankruptcy and concordat processes are of critical importance in terms of restoring trust in the financial system.

Digitalization and green transformation are no longer a choice, but a direct survival strategy. No business model that does not produce productivity has sustainability under high-cost and narrowing demand conditions.

As a result, while the Turkish economy continues its macroeconomic rebalancing process, it must establish the delicate balance that will protect the production and employment capacity of the real sector. Otherwise, short-term financial stability gains may be overshadowed by the weakening of the production economy in the long run.

It should not be forgotten that economic success is measured not only by lowering inflation but by being able to protect production, employment, and social welfare together. Today, the real warning signal is not the bankrupt companies; it is the weakening entrepreneurial dynamism, the deteriorating payment chain, and the narrowing financing space. If these signals are not read correctly, today's vulnerabilities will turn into tomorrow's deeper structural problems.