According to the report "MDS Research: Economic Situation in Portugal", Almost half (47%) of the Portuguese companies reduced their activity.
Almost half (47%) of the companies in Portugal reduced their activity and almost a fifth (17.4%) closed down or stopped altogether, according to the report “MDS Research: Economic Situation in Portugal” released on Friday.
MDS, a Portuguese multinational risk and insurance consultancy, states that the Portuguese business fabric is facing an unprecedented crisis, with a significant reduction in activity.
According to the report, which is based on a survey carried out among 115 companies in almost two dozen sectors of activity, less than half of the companies managed to maintain their level of activity, but a small fringe (5.2%) managed to grow in the shadow of the pandemic.
“Most companies had to implement measures to respond to the constraints, either through legal enforcement, such as working from home and health protection measures or because the financial soundness of the companies was affected,” it added, pointing out that reducing investment, cutting costs and resorting to layoffs are among the main measures adopted, with a relatively small percentage of companies seeking new ways of doing business and improving their supply.
Almost half of the participants in the study (45.2%) were micro-enterprises, 19.1% small enterprises, 16.5% medium-sized enterprises and 19.1% large enterprises.
Entrepreneurs and managers estimate that the Portuguese economic recovery is in “U” shape, taking between one and three years to return to previous levels of activity.
More than two-thirds of companies (73.1%) expect a reduction in their turnover in the period from April to June, compared with the first three months of the year, while 10.4% expect growth in their business volumes.
“The reduction in activity levels should continue during the second half of the year, with around three out of four companies (73%) estimating a decrease in sales, while only 12.1% expect an increase,” said the report developed by MDS with the collaboration of the Portuguese Chamber of Commerce and Industry (CCIP) and BA&N Research.
“Considering the median of the sample of companies that estimate a reduction in the indicator, the reduction in turnover in the second half of the year could be in the range between 25% and 40%,” the report said.
More than three out of five companies (61.7%) estimate a lower level of activity in the next 12 months, while 23.5% expect an identical level and 14.7% a higher one, it added, pointing out that more than half of the companies (56.5%) assume an expectation of total cut or suspension of investment in the next 12 months.
In terms of human resources, current instruments such as layoff or reduction of hours and shifts will continue to be part of the life of some companies, with only 3.5% admitting redundancies and 2.6% have an inverse position, creating jobs.
The main current concern of managers and businesspeople is the level of liquidity and cash flow situation of their companies, followed by the lack of orders and payment of salaries, and in some sectors, such as industrial, production expedition and supply are also of great concern, as they jeopardise the operation.