Coface Survey: 33% decrease of Insolvencies in Romania in H1 2019 compared to the same period of the previous year

A new survey conducted by Coface Romania on the evolution of insolvencies in Romania in H1 2019, points out a 33% decrease in the number of insolvent companies during this period, in the context of a real and sustainable economic growth of 5.1%. However, the macroeconomic evolution is not sustainable due to many imbalances: the growth of the fiscal deficit by 81% during the first half of this year compared to the same period of the previous year, the highest annual inflation in the EU of 4.1%, the increase of the trade deficit and depreciation of the national currency. Moreover, Coface’s analysis shows that the decline of insolvencies is offset by the increase of the number of radiated companies, the payment delays increase significantly and the large companies are facing a challenging economic environment.

Positive aspects and trends:

• The number of insolvent companies decreased by 33% during H1 of this year compared to the same period of the previous year;
• The number of insolvent companies during H1 2019 generated the smallest financial losses of the last 10 years;
• The regional distribution of insolvency cases during H1 2019 reflects the generalized decrease at national level, all regions recording decreases exceeding 20% in the number of companies that went insolvent.

Foreseen future risks

• Almost three quarters of the decrease in the number of insolvency cases is recorded for the segment of companies that did not file their financial statements (37%), did not record income (14%) or whose turnover recorded in 2018 was under EUR 100,000 (27%);
• The decrease in the number of insolvencies is canceled by the significant increase in the number of companies that have been radiated (+76%), thus the number of companies that suspended their activity during the first half of this year is 85,960 companies, increasing by 36% compared to the same period of the previous year;
• The business environment remains very polarized, the first 1,000 companies (as per their turnover) concentrating half of the income of all 500,000 active companies in Romania;