The clock is ticking for Portuguese companies

in News · 17-04-2020 01:00:00 · 7 Comments
The clock is ticking for Portuguese companies

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.



Comments:

I agree John, I'm not paralysed with fear and the virus certainly won't stop me going out again,or travelling. However, the financial impact of this economic shutdown may well leave me (and many others) too poor in the future... I'd rather take my chance with the virus and have a life worth living!

by Darren from UK on 18-04-2020 06:02:00

Well, it is all a decision between life and livelihoods. All the measures taken are to reduce the loss of life of very old people (something that very often can anyway not be prevented) over the livelihoods of millions. It is really that simple. I am sorry for those that will lose everything - including the overseas investors. Fact is that you might have to go back home and live off social security (if there is such a thing). Never forget the government has made this decision for the people. Maybe we have the wrong government?

by John Dough from Lisbon on 18-04-2020 08:51:00

We are equally as desperate to get to you as you are to have us. Very little news about Portugal. Hoping to be there July, maybe more relistically August, who knows.

by Lorna T from UK on 17-04-2020 10:00:00

We had planned to move to Portugal and be there this month,April.We cannot wait for lockdowns to end so we can get into Portugal as we believe it is and will still be a beautiful Country with wonderful people,and trust that the country will get back to what it was before this virus.We live in South Africa.God Bless Portugal and it,s people.

by George Price from Other on 17-04-2020 05:27:00

We are a Belgian couple, living in Portugal since August 2019. We have been supervising the finishing of our brand new bed & breakfast; living exclusively from our savings/sale of the former house. The plan was to open in February 2020, but in the end we received our license in March - happy that we finally would be welcoming guests and start earning money again. Then Covid-19 happened... We are lucky that most of the foreseen guests delay and do not cancel. But still, the bills need to be paid and we need to buy food. After this big investment and the costs of the construction being even higher than our 'generous' estimate, there is no money left. It is so hard, as foreigners in Portugal to learn about and understand all the auxiliary measures, let alone handle the paperwork. I filled out a business survey too, but found it too simplified and subject to erroneous conclusions. For example, a mandatory field: 'do you foresee to fire employees in the month of April? Yes - No'. Since it's only my husband and I , we have no employees - what dó you answer ?? People all over the world are having the same worries ...and a lot of them are a lot worse off than us. We know how it is to live comfortably, but children in third world countries have to slave every day in dangerous circumstances. Refugees risk their lives to escape from war and famine. And the list goes on... Maybe it's time to rethink our whole model of work related income.

by Kate W. from Other on 17-04-2020 01:26:00

This is not unique to Portugal and just shows the fragility of businesses and the flaws in the financial and business models of the world that politicians are incapable of addressing . The crisis has also shown the incompetence of politicians across the EU to maintain a good and robust health system and they need to be sanctioned .

by Paul R from Lisbon on 17-04-2020 08:24:00

This is still overly optimistic. The government's approached might have saved some lives of very old people, but it will destroy 100,000 of livelihoods for good. Does anybody believe that tourism will come back to Portugal in 2020? Does anybody believe that an almost paralysed with fear population will start going out again? You must be joking.

by John Dough from Lisbon on 17-04-2020 08:19:00
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