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The Warsaw Voice » Business » August 29, 2013
Business & Economy
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Economy Improving But Bankruptcies Up
August 29, 2013   
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There are clear signs that the worst is behind us. The Polish economy has picked up, if only slightly, industrial production figures are improving and exports have been breaking one record after another. But not all sectors have seen a recovery, as the growing number of bankruptcies shows.

In July alone, courts announced 98 Polish companies bankrupt, up from 75 in the same month last year, according to the Euler Hermes Collections company. Since the beginning of the year, 581 companies have gone bankrupt compared to 547 in 2012. Although most of the companies operate on local markets, the number of larger joint stock companies going bankrupt is on the rise—20 percent up on last year. The construction industry has hit the biggest problems, which is reflected in the number of bankruptcies in this branch.

More bankruptcies were declared in July in construction than in any other sector, with one in three bankruptcies involving builders, especially those specializing in the construction of roads and other infrastructure projects, such as pipelines, transmission and distribution networks, and finishing works like drainage and wiring. The almost 100 bankruptcies in a single month is the highest figure in ten years.

For the time being, the pace of growth in exports and internal demand is too slow to offset the losses sustained by construction. It will take some time before we see a recovery in demand, the inflow of fresh money to the economy and the budget, and more cash available for new investment projects. Consequently, we should not expect a quick improvement in the situation in the building sector.

Bankruptcies in this branch result in a rise in unemployment, which is one of the biggest problems the Polish economy is now facing. Luckily, there are sectors which have been expanding despite the crisis and creating new jobs. One of them is the modern business services sector. A recent report entitled BPOland Potential and Prospects by professional services company CBRE in conjunction with the Hays company and the Polish Information and Foreign Investment Agency (PAIiIZ) says that Poland is the most popular market in Central and Eastern European with BPO investors. Last year, Poland moved ahead of India in terms of how fast jobs were being created and existing BPO projects were being expanded. Since 2008, the number of people employed by companies providing modern business services has been growing by 20 percent annually. The sector now employs 110,000 in 400 centers, while the cities of Cracow, Warsaw and Wroc³aw are the most popular locations for companies operating in the BPO sector.
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