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|Coface Insolvency Monitor for CEE: Economic perspectives improved but corporate challenges remain|
|Tuesday, 02 June 2015|
Companies in Central and Eastern Europe (CEE) have experienced turbulent
times over the last few years. Economies were challenged by the
contraction of private consumption, due to rising unemployment and the
ongoing deleveraging process. They were also affected by the double dip
recession of their main trading partner, the Eurozone. 2014 was a year
of improvement for most CEE economies. The average pace of GDP growth
increased from 1.3% in 2013, to 2.5% in 2014. The engine of economic growth was fuelled by internal demand.
This is especially visible in the case of household consumption, which
is benefitting from lower unemployment rates, rising wages and improved
consumer confidence. Low inflation, or even deflation, has reached many
economies in the region. This has mainly been caused by external
factors, such as lower commodity prices. The improved economic
perspectives led to a stabilisation in the number of insolvencies, with a
modest decrease of -0.5% in 2014 (compared to +7% in 2013).
“In spite of a minor improvement, there are still a sizeable number of insolvencies, with over 65,000 companies declared insolvent last year. Improving domestic consumption was not a sufficient-enough factor to return insolvencies to their pre-crisis levels. With forecast GDP growth of 2.7%, we are positive that the downward trend in insolvencies will continue in 2015. Nevertheless, it will take time until companies can fully benefit from the economic recovery”, explains Grzegorz Sielewicz, Coface Economist for Central Europe.
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