2% of Portuguese companies had already closed down definitively at the beginning of April

  • ECO News
  • 14 April 2020

According to a survey made by INE and Bank of Portugal, 2% of companies had already closed down definitively at the beginning of April.

The impact of the pandemic on the activity of Portuguese companies is already visible, according to the first results of the survey prepared by the National Statistics Institute (INE) and the Bank of Portugal (BdP) to monitor this crisis. According to the document released this Tuesday, 2% of companies had already closed permanently.

The survey was carried out between April 6th and 10th and is “directed at a broad range of micro, small, medium and large enterprises representative of the various sectors of economic activity,” said the INE and the BdP.

This survey analyses the situation of Portuguese firms, using a representative sample of the business fabric, at a time when the country is under a state of emergency. “This information is necessary so that trends can be recognised and lines to be followed in order to mitigate economic affects, namely on firms themselves”, argue the two institutions, thanking the firms for their response “at this difficult time the country is going through.”

In general terms, the summary is simple: 82% of companies are still operating, even partially; 16% are closed, but temporarily; 2% have already closed definitively and should not open again. Unsurprisingly, the accommodation and catering sector, whose establishments continue to operate only through take away, is the sector that “has the greatest impact due to the pandemic” with 55% of companies temporarily closed and 7% definitively.

Of those in operation or temporarily closed, 37% recorded a reduction in turnover of over 50%. Also from this universe, 26% saw the number of people working fall by over 50% as a result of the social distancing measures taken by the Government.

Almost 50% of companies can only withstand two months of impact

There is much information that stands out from the companies’ replies, namely that “almost 50% of the companies cannot stay in business for over two months without additional liquidity support measures” or that “a small percentage of the companies in operation or temporarily closed have already benefited from the measures announced by the government”, excluding layoff.

Almost half of the companies in this sample can hold out for up to two months without additional liquidity support measures, and 10% even say they cannot hold out for another month. “These percentages are more significant in the group of micro and small companies”, the report describes, on the other hand, stating that the large companies are the ones that will be able to hold out the longest. However, it should be remembered that the overwhelming majority of the Portuguese business fabric, in number, is made up of SMEs.

By sector of activity, accommodation and catering stands out again on the negative side because they are the least resilient to the step between the other sectors there are no sizeable differences.

These figures are in line with the fact that “around 12% of enterprises” had resorted to additional credit in the previous week, “this percentage being higher in micro-sized enterprises” and in the trade sector and lower in large enterprises and other sectors. “In most cases, the new loans presented conditions similar to those previously practiced”, he also clarifies the highlight released today.