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Bankruptcies up by 21% y-o-y in January-July


The number of business failures in Poland in 2012 to date remains well above year-ago levels and the trend will continue despite a temporary deceleration in July, according to latest data from Euler Hermes, the global provider of credit insurance solutions.

In the first seven months of 2012 Polish courts declared the bankruptcy of 547 companies, compared with 451 in the same period of 2011, an increase of 21% y-o-y. The figure for July was 75, though, down from 76 a year earlier and from 77 in June.

Euler Hermes notes that the July result should not be read as a sign that the negative trend is about to reverse. Rather, it is consistent with a familiar seasonal pattern, and macroeconomic trends strongly suggest that the number of business failures will continue to rise. In fact, it has done so uninterruptedly since 2009, i.e. also in much better economic times. (In 2011 the number of bankruptcies rose by 6%.)

The construction sector remains the worst hit by far, with 157 failures in January-July, up by 75% y-o-y. Companies supplying or otherwise serving the sector are also going under in growing numbers. Subcontractors are facing a particularly high risk of bankruptcy in the months ahead, according to Tomasz Starus, Chief Analyst at Euler Hermes. It would be an exaggeration, however, to claim that the entire industry is in a crisis, and its payment statistics are actually not that bad, Mr. Starus notes.

Another sector with a sharp increase in business failures in January-July is retail trade. With consumer spending losing momentum, the number of retailers declared bankrupt jumped by 65% y-o-y in the seven months to July. They include not just grocers or cosmetics stores, but also specialist retailers of sports gear or computers.

The situation in the transport sector has also deteriorated markedly.

Euler Hermes estimates that bankruptcy numbers will rise at an annual rate of about 20% in the remainder of the year, and might even accelerate in Q4 due to anticipated bigger increases in the construction and food sectors, reaching minimally 850 at the end of 2012.

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