Portuguese insolvencies “on the increase”

Rising 2% this year; up to 16% in 2023

The number of insolvencies among Portuguese companies is expected to grow by 2% this year compared to last year – and by almost 16% in 2023, Cosec – Credit Insurance Company has revealed.

The expected growth contrasts with the year-on-year drop recorded in the last two years, of 2.3% in 2020 and 12.3% in 2021, COSEC said in a statement.

Chair of COSEC’s board of directors, Maria Celeste Hagatong, told Lusa the “pandemic has led the government to implement various support mechanisms for companies” in the last two years, which “has made it possible to limit” the number of insolvencies.

However, most of this aid has now ended. The effects are “already visible”, for example, with the 19% increase in Special Proceedings for Revitalisation registered this year”.

This “a clear sign” of the increase in the number of companies that “facing serious difficulties in fulfilling their obligations on time”, she explained.

Cosec also believes the climate of economic uncertainty in Europe – where the main trading partners of Portuguese companies are located –  rising production costs (mainly reflecting the rise in raw material prices) and high inflation are “additional challenges” for companies, and could lead to an increase in bankruptcies.

In the Global Insolvency Report: ‘Growing risks and uneven state support’, Allianz Trade, a COSEC shareholder, predicts insolvencies among companies in the euro area would increase by 12% this year.

For 2023, the study estimates an increase of 16% compared to this year.

On a global scale, the estimate for insolvency growth is 10% this year and 14% in 2023, the study concludes.

Source: Lusa