Insolvencies among big companies with a turnover higher than one million euro were up 5 percent in H1 2018, to 189, and the total loss incurred to the creditors of insolvent companies increased 10 percent to 5 billion lei, shows a new Coface survey on the evolution of insolvencies in the first half of this year.Most insolvencies opened in H1 2018 were in retail trade (674), followed by construction (663) and wholesale and distribution (624).
"The main factors leading to the deterioration of the companies' payment behavior is the decline of the entrepreneurs' trustworthiness on the one hand, and on the other hand the increasing costs, especially with salaries, utilities and fuel, growing spending with interest and the repayment of bank loans, and tax unpredictability. To this adds Romania's underground economy which, according to EC estimates, is almost 28 percent of GDP, the highest in the EU after Bulgaria, allowing for unfair competition and posing difficulties in being competitive, raising difficulties in finding workforce for a wage that reflects real productivity," said Iancu Guda, Coface Romania Services Director.
According to the survey, in the first half of this year insolvent companies caused creditors (credit institutions, suppliers, etc.) total losses of nearly 5 billion lei, up 10 percent compared to the same period of 2017. In terms of public spending, the Coface survey found that personnel expenses (which were up nearly 50 percent in the last three years) and social assistance expenses (up by 14 percent) account for 71 percent thereof. The annual inflation increased to 5.4 percent in June, the highest in the EU, and interbank interest rates were in line with inflation in the context of the central bank's restrictive and accommodative monetary policy.
As many as 74,442 companies halted their activity in the first half of 2018, up 12 percent from the same period last year. At the same time, the number of newly registered limited liability companies in the first half of this year is 45,276, down 19 percent compared to the same period of 2017.