Sierra Quadrant: Consumption loses ground. Insolvencies are expanding strongly in the trade sector

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Consumption, the main engine of economic growth, is starting to lose ground. Inflation, financial blockage, the depreciation of the leu and the decline in sales create more and more difficulties for trading companies. Over 1,200 companies in this sector went into insolvency in the first eight months of this year. The number of retail insolvencies since August was almost 10 times higher than in January, a Sierra Quadrant analysis shows.

In an extremely fragile economy, such as the Romanian one, based primarily on consumption derived mainly from imports, the entry of a company in financial difficulty can create major problems on a large scale, experts say.

As over 90% of Romanian companies are poorly capitalized, not having the financial resources available to withstand the challenges, the entry of a partner in insolvency can lead to financial problems cascading along the entire economic chain.

According to the data from the Trade Registry, analyzed by the Sierra Quadrant, 1,244 companies in the wholesale and retail sector went into insolvency in August, a number almost equal to that of the companies that declared insolvency in the first three months.

In January, ONRC reported 147 insolvency firms, in February – 299, and in March, 468 companies. Over the first eight months, the statistics show a number of 1,244 insolvency companies compared to 1,769 in the same period of 2018.

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