Promised as the economy began to rebound from the waning covid surge, many firms expected smooth sailing. Yet this crisis has already shown that declaring victory is risky. For example, in the first quarter, Alicante Province set a startling record with 388 company liquidations — a figure not seen even in the depths of 2008’s Great Recession. Most closures involve businesses that fought to weather the pandemic but ultimately could not withstand inflationary pressures and the war in Ukraine. On the flip side, there is a positive trend: company registrations are rising again.
The coronavirus outbreak hit the economy hardest during the initial 2020 lockdown when almost all activity ceased. Since then, the trajectory has been uneven, marked by waves and temporary restrictions tied to international developments. Once vaccination campaigns gained momentum in the latter half of the previous year, optimism grew. Hospitals saw fewer covid cases, while the pace of easing preventive measures intensified — though these steps often slowed business momentum rather than sped it up.
Still, forecasts in this period did not always align with reality. The latest data from the National Institute of Statistics shows a striking rise in liquidations in Alicante: 388 closures in the first quarter, a peak not previously reached in similar quarters. Earlier pandemic years logged 314 terminations in the same span last year and 292 in 2020.
Across the broader historical record, such a jump stands out. The number of companies closing in the province during the era of the 2008 financial crisis touched 358, with subsequent years staying below that mark. Only 2013 showed a comparable rebound, albeit still lower at 371 terminations.
Analysts point to two macro forces shaping the outlook. First, persistent inflation driven by higher energy costs and raw materials prices. Second, the ongoing conflict in Ukraine that adds political and economic uncertainty. Together, they create a challenging environment for planning and investment.
Economist Francisco Llopis of the Institute for Economic Research in Alicante notes that many liquidations reflected firms that struggled throughout the pandemic and improved only when new hurdles emerged that threatened their ongoing viability. The message is clear: some businesses survived the crisis only to be pulled under by fresh, external shocks.
Company formation in the province rose markedly in Q1
On the positive side, new business activity is gaining traction. Registrations for new companies reached 1,505 in the first quarter, up 14.6% from the same period a year earlier. This rise is notable, showing a growth rate roughly five times higher than the national average and signaling strong entrepreneurial momentum in the region.
Economist Llopis attributes this uptick to Alicante’s resilience and its position as a hub for productive activity. He argues that the area is recovering more robustly than other regions, though he cautions that the path ahead remains uncertain. The shift suggests renewed confidence among founders and investors, but it also raises questions about capacity, supply chains, and access to capital as more ventures start up.
The forward-looking picture remains guarded. While vaccination progress and lower health-system burden reduce some risks, the persistence of higher inflation and the geopolitical strain that accompanies the Ukraine conflict means volatility will persist. In the near term, tourism could help bolster growth, but policymakers may need to reinforce price controls and supply resilience to sustain the recovery.
Across Canada and the United States, similar patterns emerge: pockets of rapid business formation alongside heightened caution among established firms facing cost pressures and labor market shifts. The shared takeaway is that a genuine rebound requires a stable mix of affordable inputs, predictable policy signals, and a resilient supply chain—elements that will determine whether early gains translate into durable growth in 2025 and beyond.