The clock is ticking for Portuguese companies


in News ·
17-04-2020 01:00:00 · 7 Comments

While the lockdown in Portugal continues to protect the health of citizens across the country, businesses of all sizes are struggling to survive.

Almost 50 percent of the companies say they do not have the financial conditions to remain in business for more than two months without additional measures to support them and about 12 percent of the companies have already resorted to additional credit.

Data provided by a survey produced by the National Statistics Institute (INE) and Banco de Portugal (BdP) has been collated to try to identify some of the main effects of the Covid-19 pandemic on business activity.

The INE and BdP have disclosed the main results of the Quick and Exceptional Business Survey – Covid-19, addressed to a wide range of micro, small, medium and large companies, representing the different sectors of economic activity in the country. It is based on a quick answer questionnaire on turnover, the number of employees, the use of public support instruments, liquidity availability, the use of credit and the prices charged.

According to the survey more than 80 percent of the companies remained in production or in operation last week, albeit partially.
“The results of the first survey week (week from 6 to 10 April), indicate that 82 percent of the companies remained in production or in operation, even if partially, 16 percent were temporarily closed, while 2 percent indicated that they had definitively closed ”, according to the INE / BdP monitoring report of the impact of the pandemic Covid-19 on companies.

In sectorial terms, accommodation and catering is the sector that has seen the greatest impact due to the pandemic, with the highest percentage of companies closed temporarily (55 percent) and definitely (7 percent).

According to the data, 37 percent of the companies reported a reduction of more than 50 percent in turnover in the week from 6 April to 10 April, 37 percent of the companies reported reductions in turnover between 10 percent and 50 percent and the companies temporarily closed mostly report reductions over 75 percent.

Micro-enterprises and companies in the accommodation and catering sector were the ones that most frequently reported reductions of more than 75 percent in turnover.

Restrictions in the context of the state of emergency and the absence of orders / customers were reasons that had the greatest impact on almost all companies, points out the document.

With regard to staff actually employed, 61 percent of companies reported a reduction as a result of the pandemic, while 38 percent said there was no impact.

According to the survey, the proportion of companies reporting a reduction increases with the size of the company and by sector, the highest percentages of companies with reductions in personnel employed in accommodation and restaurants and in transport and storage are observed.

In relation to other public support measures recently implemented, “only a very small percentage of companies have already benefited from these measures, but there is a higher percentage that intends to benefit”.

However, “a significant portion of the companies do not plan to use each of the measures considered individually”.

A significant percentage of companies have already resorted to the simplified ‘lay-off’, according to BdP / INE data.

As of 15 April simplified lay-off already covers more than 930,000 workers in Portugal.

The Minister of Labour, Solidarity and Social Security, Ana Mendes Godinho said: “At this point, the simplified lay-off has already reached 931,000 workers who have seen their jobs maintained. It is showing that in some way, that the simplified ‘lay-off’ is serving as a cushion to maintain the jobs during this phase that we are going through”, she said.

The official also said that about 145,000 independent workers have already accessed the extraordinary support created also in the scope of measures to respond to the spread of the new coronavirus.

Meanwhile, the International Monetary Fund (IMF) predicts a recession of 8.0 percent of the Portuguese economy and an unemployment rate of 13.9 percent in 2020, due to the Covid-19 pandemic, according to with the World Economic Outlook.

For 2021 the scenario is reversed, with the institution led by Bulgarian Kristalina Georgieva pointing to a recovery of 5.0 percent of GDP, an unemployment rate of 8.7 percent and inflation of 1.4 percent.

In 2019, GDP growth was 2.2 percent and the unemployment rate was 6.5 percent.

Finance Minister Mário Centeno said that the Government’s estimates point to a 6.5 percent drop in annual GDP for every 30 business days while the economy is paralysed due to the Covid-19.

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