NEWS: Auctions and funding - great mysteries of the construction market

Contrary to initial estimates of market participants, the volume of construction works decreased in the first five months of this year compared to the same period in 2012, both as gross and adjusted series and by number of working days and seasonality, by 7.2% and 7.6%, according to the latest data published by the National Statistics Institute (INS). Thus, 2013 will remain challenging for companies active in the field, especially given the weak forecasts for the country's main export markets and the need for continuous austerity on the local level. The economic growth, so necessary for the recovery of the construction market will achieve sustainable levels only over the medium term as a result of increased consumption and business confidence and the increase of exports, although these will reach lower values than the ones recorded in the pre-recession period. On the short term, companies will continue to be affected by insolvency, the lack of funding for investments and the economic unpredictability leading to impossibility of developing business strategies even on the medium term. The construction industry continues to place first in the ranking of insolvencies, according to the data for the first quarter of this year released by the risk management company Coface Romania. According to the analysis made on the basis of information provided by the National Trade Register Office (ONRC), 2013 will be the year of great bankruptcies, given the significant increase of the number of companies with a turnover of over one million EUR which are in payment default. At the end of March, 6,381 companies registered in Romania were in various stages of insolvency proceedings. However, their number decreased by 10% compared to the corresponding period in 2012, when 7,139 new cases were opened. In what concerns the size of companies that find themselves in the default period, the number of firms with a turnover of over one million EUR has increased two and a half times. Thus, out of the 239 companies with annual revenues of more than one million EUR which became insolvent in the first three months of the year, 191 reported a turnover of up to 5 million EUR and the other 26 between 5 and 10 million EUR. For further information and a detailed analysis of the current Agenda Constructiilor issue click here!