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The Warsaw Voice » Business » January 31, 2013
Business & Economy
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More Bankruptcies
January 31, 2013   
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Poland was one of the fastest growing economies in Europe last year and stood out with strong macroeconomic indicators despite the crisis in the eurozone. Sales in industry grew at a faster rate, labor efficiency in industry improved and retail sales and revenues from exports increased, while at the same time the foreign trade deficit shrank. Still, the relatively robust macroeconomic performance cannot conceal problems which troubled Polish businesses last year.

As domestic demand dwindled in the final months of last year and the situation abroad remained a cause for concern, many Polish businesses faced difficulties. Many lost liquidity and a total of more than 940 businesses declared bankruptcy. According to the Euler Hermes credit insurance company, 28 percent more businesses went bust than in 2011, when Polish courts declared 730 companies bankrupt. Last year saw the highest number of bankruptcies in Poland since 2004. At 28 percent, the increase was higher than in Spain (24 percent) and close to Greece (30 percent). The only country in the EU to have a considerably higher increase in bankruptcies was Portugal, at 43 percent.

Experts are predicting that this year will be even worse. The government expects Poland’s economic growth to stay below 2.2 percent, while net sales profitability for companies is expected to drop to 2.5 percent. Many analysts believe that economic growth will slow to a mere 1 percent. Consequently, many more Polish businesses are likely to face bankruptcy. And the first quarter could be the worst, according to Export Credit Insurance Corporation.

The most vulnerable sector is construction, including producers of aggregates and components for building infrastructure. Many construction businesses have been struggling for months, in part due to unprofitable projects conducted in conjunction with the Euro 2012 soccer championships. The construction sector has been coping with difficulties for a long time and it tops the statistics in terms of both the number of bankrupt businesses (25 percent of all bankruptcies declared in Poland last year) and the rate at which the number has increased—around 53 percent more bankruptcies than in 2011.

Companies struggling to remain profitable include businesses operating in the furniture and pharmaceutical sectors and producers of transportation equipment.

The fact is that the macroeconomic situation is getting worse and bankruptcies are likely to accelerate in 2013. Economists believe, however, that these troubles will be short-lived and the first signs of the economic situation returning to normal are expected halfway through the year. A clearer improvement should be visible at the end of the year.
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