site.btaSurvey: Bulgaria Sees 8.1% Drop in Bankruptcies in 2015

Survey: Bulgaria Sees 8.1% Drop in Bankruptcies in 2015

Sofia, July 20 (BTA) - Following a relatively prolonged period of growth in bankruptcies, a Coface survey has found that for a second straight year bankruptcies are on the decline, with 8.1 per cent down in 2015 and 23 per cent in 2014. Coface has released its annual bankruptcy report about Central and Easter Europe.

In 2016, bankruptcies are expected to decline by further 2.3 per cent. In Bulgaria, the share of bankruptcies is 0.15 per cent of the total number of companies, which is one of the lowest in the region.

The situation in Bulgaria is improving due to the more favourable economic conditions. However, risks in Europe and globally are increasing and the region can't isolate itself from this trend, said Milena Videnova, the Bulgarian manager of Coface.

According to the agency, Central and Eastern European countries enjoy fabourable economic conditions which has led the region to see a decline of 14 per cent in the number of bankruptcies in 2015. Such a decline is observed in nine of the 13 countries, with Romania (49.5 per cent) and Hungary (44.2 per cent) reporting the greatest decline. The situation is worse in Lithuania, the Czech Republic, Serbia and Ukraine with a 20.8 per cent increase in bankruptcies largely due to the recession which followed the conflict with Russia. Coface has observed a positive trend in the region and estimates that bankruptcies will drop by 5.3 per cent in 2016.

Regarding the performance of the individual sectors, they depend directly on household consumption and increased demand. Construction in the last year was driven by projects co-funded by the EU but payment morality is low and these companies feature heavily in bankruptcies statistics.

However, the bankruptcy statistics in Central and Eastern Europe remain positive. This trend is expected to persist and companies will continue to benefit from the favourable economic conditions compared with shocks experienced by many developing economies. Improving trends in the regions are confirmed by the assessment of risks in the individual countries. The further development of the labour market will speed up household consumption which is expected to be the main engine for economic growth in Central and Eastern European countries. The share of investments will be smaller from last year due to the slow start of new EU-funded projects, according to the Coface experts.