Romania Ranks 1st Among Six Eastern Europe Countries By Number Of Closed Companies - Survey

The World Bank's survey measures the effects of the economic crisis on 1,686 companies in six countries in Eastern Europe and Central Asia: Bulgaria, Hungary, Latvia, Lithuania, Romania, and Turkey.

The highest number of companies that filed for bankruptcy was reported by Turkey (6.8%), followed by Romania (4.9%), Latvia (4.7%) and Hungary 1.5%.

The major effect of the crisis in the six stated included in the survey was a drop in demand which triggered downfalls on the labor market affecting permanent employees.

The survey shows that permanent employment decreased in five states, while temporary employment declined in four states.

The companies included in the survey, except the Romanian companies, mainly use internal funds to finance their working capital.

The survey included 370 Romanian companies of which 30% had 5 to 19 employees, 36% 20 to 99 employees and 34% over 100 employees. About 39% of these companies operate in the manufacturing industry, 25% in retail and 36% in other sectors.

The World Bank's survey shows that large companies registered a lower drop in sales compared to small and medium-size companies. In Romania and Hungary, medium-size companies saw a slightly smaller drop in sales.

In Romania, exporting companies saw a significantly larger reduction in sales (39%) than non-exporting companies (24%). Sales in the Romanian retail sector dropped 20%, while manufacturing companies registered drops of 27%.

The number of permanent employees decreased in five of the states included in the survey, and only Romania registered an increase in the number of permanent employees. Nevertheless, 50% of the Romanian companies participating in the survey reduced the number of their permanent employees.

More than a quarter of the firms in Latvia, Lithuania, and Romania have been overdue in the last year, the survey shows.

Nearly 33% of the Romanian companies do not finance working capital with internal funds or retained earnings and almost 50% of the companies that use external funds only have been overdue on their financial obligations in the last 12 months, the survey shows.

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