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March 27, 2023

Coface forecasts economic growth of up to 0.5 pc in 2012

Coface estimates that Romania’s economy will grow by up to 0.5 per cent this year and by 1-1.5 per cent in 2013, a forecast that is less optimistic than those made by the IMF, the EC and the Romanian authorities. “Romania is an attractive consumer market but we had political turmoil that lowered foreign direct investments and the investors are looking for stability. The state plays a very big role in making the market more attractive,” Constantin Coman, Coface Romania country manager, stated yesterday, Mediafax informs. He added that the 2013 forecast could be revised depending on developments in Europe. “Germany is showing signs of fatigue and there is a link between Romania’s and Germany’s economic evolution. Likewise, political stability will be reflected in the economy. A more tranquil political environment will be the main driver for growth. The agriculture sector won’t help us and it’s difficult to point out what the other growth drivers will be next year,” Coman added.He added that the average turnover of companies that filed for insolvency in 2012 is 34 per cent higher than that of companies that did the same last year. 16,481 companies were no longer able to pay their debts in the first nine months of this year, 7.6 per cent more than during the same period last year. “The crisis drags on in Romania, considering that a hike in the number of insolvencies is still being registered. For the end of the year we are estimating a 10 per cent year-on-year growth because there will be an average of 2,000 cases per month in October, November and December,” the Coface Romania country manager added.At the same time, the debts that insolvent companies owe this year are 50 per cent higher than their turnovers, a level smaller than the one registered last year back when the value of their debts was twice that of their turnovers. At the same time, in 2012 the loss represented 17 per cent of turnovers, below the 20 per cent level registered in 2011. These companies’ degree of indebtedness stood at 55 per cent of their assets, compared to 116 per cent in 2011. 86 per cent of the insolvent companies this year are micro-enterprises, but they represent less than 10 per cent of the insolvent companies’ total consolidated turnover, 12 per cent of their number of employees and 0.5 per cent of the total value of debts. Mid-size, large and very large companies represent 3-4 per cent of the total number of insolvent companies registered in the first nine months of the last three years, however their share in the total turnover of insolvent companies grew significantly, from 40 per cent in 2010 and 38 per cent in 2011 to 70 per cent in 2012. “This shows that we don’t have a propitious economic environment yet. Although they cut costs and resorted to restructuring they filed for insolvency,” Coman explained.The biggest hikes in new insolvencies were registered in retail trade (+17.74 per cent), real-estate transactions (+14.04 per cent), hotels and restaurants (+13.44 per cent) and transportations (+11.76 per cent). The share of the top three sectors that registered the most cases of insolvencies in absolute figures (retail trade, wholesale trade and distribution, constructions) varied in the last five years from 50 to 54 per cent.

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