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KeysFin Macro Update : The resistance of the Romanian business environment in the pandemic
However, the challenges of Romanian managers continue in 2021 and their success depends on the performance of the local authorities in balancing the fiscal adjustment with supporting the economy, according to the latest edition of the KeysFin Macro Update report.
The number of insolvencies, suspensions, dissolutions or strikes off of companies remained in the year of the pandemic well below that of 2019. Thus, the number of suspended companies decreased in the year of the pandemic by 22% compared to 2019, to 10,913 entities. The number of companies that had insolvency proceedings also decreased by 12.7% in 2020 compared to the previous year, to a new historical minimum of 5,694 firms, according to data from the Trade Register Office.
Deletions and strikes off decreased by 43% in 2020 compared to 2019, to the lowest level in the last 10 years, of 77,099 companies whereas the number of active entities (registered sole traders and legal entities) increased last year by 5%, to the highest level in history (at the end of the period), at 1,430,180 on December 31st, 2020.
“In 2020 the economy has remained in the range we estimated in March last year (annual decrease between 5 and 7%) and for 2021 we expect a recovery of the economy between 2.5 and 3.5%, visible especially from the second quarter due to the strong base effect", said Roxana Popescu, Managing Director of KeysFin, one of the most important providers of business information solutions in Romania.
AUTHORITIES 'MEASURES VITAL TO THE LOCAL BUSINESS ENVIRONMENT
The most important risks remain, according to KeysFin analysts, the budget deficit and the current account one. The rigid and unsustainable structure of budgetary expenditures coupled with the tax collection ineeficiency has led to a singular imbalance in Europe: social spending, i.e., public sector salaries and pensions, almost exceed the fiscal state revenues.
At the same time, the continuation of measures to support the business environment in the face of an unprecedented crisis: suspension of payments to creditors, simplified instalment plans, grant schemes, SMEs Invest, the measures to protect the workforce, but especially the volume and allocation scheme of the European funds attracted remain the key to short- and medium-term economic performance, the report said.
MORE DIFFICULT BEGINNING FOR LOCAL BUSINESS
Company incorporations have tempered the decline generated by the pandemic, their number reducing to almost 110,000 of newly established companies in 2020. Despite the overall decline, in the energy & gas and transport & warehousing sectors we notice an annual advance in the number of newly established companies of 116 % and 6%, to 186 and respectively 11,688 incorporations in 2020. On the other hand, there were annual decreases of over 45% in agriculture and culture & entertainment (49.7% and 49.9%, respectively).
From the geographical perspective, most companies set up in 2020 are registered in Bucharest (19,096 companies, 0.2% more than in 2019), Cluj (5,784 companies, 11.5% less than in 2019) and Ilfov (5,510 companies, respectively with 5.8% more registrations than in 2019 and the most important percentage, county advance). At the opposite end, Caras-Severin, Arges and Dambovita registered the largest percentage decreases, between 32.8% and 33.6%.
In its third edition, KeysFin Macro Update is an up-to-date and objective synthesis of the evolution of the local business environment in pandemic conditions.