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Coface : Romania, among nine CEE countries which reported insolvency increases in 2017
The total number of insolvencies grew by 6.4% in Central and Eastern Europe in 2017, nine countries reporting a higher insolvency number (Croatia, Estonia, Hungary, Lithuania, Poland, Romania, Russia, Serbia and Slovenia), according to Coface press release.
“Central and Eastern Europe had improved economic activity in recent years. That could be seen especially in 2017, when the average GDP increase in the region was 4.5%, the highest rate since 2008. Household consumption and incomes from investments have significantly contributed to the increase. However, the favourable business environment in 2017 was not enough to determine an improvement of company liquid assets. The total number of insolvencies grew by 6.4% in 2017, which means a reversal of past tendencies: -6% in 2016 after decline of -14% in 2015,” the press release mentions.
According to the source, another change was the fact that in 2017, several countries were affected by insolvency increase. Nine countries reported a higher insolvency volume (Croatia, Estonia, Hungary, Lithuania, Poland, Romania, Russia, Serbia and Slovenia), while only five countries recorded a drop (Bulgaria, Czech Republic, Latvia, Slovakia and Ukraine).
Regional differences show a great dynamics variety, from insolvency decline of 27.1% in Slovakia and 26% in Czech Republic, to slight increases of 2.4% in Estonia and 2.5% in Romania and even 40% in Croatia. The countries mentioned some of the joint reasons for company liquidity deterioration, which led in some cases to insolvencies.
Moreover, the difficulty to occupy vacant positions had become a major obstacle for companies in the area, in their activity and potential expansion.
Companies reported this problem more frequently than the lack of safety concerning demand for their products and services, according to Eurostat polls. In conclusion, economic acceleration is not the only factor affecting liquidity in the business sector of the area.
For 2018 and 2019 Coface foresees continuous increases of the number of insolvencies in the area. That confirms the end of an economic cycle in Central and Eastern Europe. In 2018, we will see an increase of the average number of insolvencies by 10.4%, more countries recording a procedure evolution. Poland is expected to have increase of company insolvencies and restructuring procedures by 20.2%. Serbia and Slovakia will experiment a contraction of their number. Slower economic increase will be a factor contributing to higher insolvencies of 15.5% in 2019, according to Declan Daly, Coface CEO for Central and Eastern Europe.
Data supplied by the National Trade Registrar Office show that the number of companies and authorised persons in Romania that entered insolvency dropped by 2.48% , to 5,615, in the first 8 months of 2018, compared to the same period of 2017.