Number of bankruptcies down in Latvia and Estonia but up in Lithuania
Last year, the number of bankruptcies declined 12.4% in Latvia and 10.9% in Estonia. Lithuania, on the other hand, had experienced a 35.2% increase in the number of bankrupt companies, according to information compiled by Coface.
The number of insolvent companies in Central and Eastern European region had declined 6% last year. Region’s growth benefited from favourable macroeconomic environment, which was largely thanks to the positive situation on the labour market with low unemployment indexes and high wage rise.
The number of bankruptcies had more than doubled in Hungary last year (+56.9%), which was the biggest increase in bankruptcy numbers in the region. In Lithuania, the number of bankruptcies was affected by the State Tax Inspectorate’s and Social Fund’s ‘cleaning’ process, which cleared the market of companies that were solvent for a long time. The largest decline of bankruptcies was registered in Bulgaria (-35.6%).
In relation to specific industries, the situation seems complicated the most for the construction sector. In Estonia, Russia and Hungary, bankruptcies of construction companies forms more than 20% of the total number of insolvency cases.
«It is expected that the total number of bankruptcies in the region will start declining this year and will continue declining next year. GDP growth and recovery of investments is a positive signal for companies. New infrastructure projects, stable household consumption rise and development of foreign markets will serve as good support for the region’s economic growth. At the same time, it is worth mentioning that bankruptcy statistics do not always reflect the actual situation. Because of that, each business should analyse payment discipline independently,» says Coface Baltics director Mantvydas Štareika.