Editor’s Note: This is the first blog in a series using a business survey assess the impact of COVID-19 on sales, business responses, public policy efforts, and future prospects with a focus on uncertainty and financial risks.
Slam in sales, but signs of recovery
What has been the damage of COVID-19 in Bulgaria, Poland and Romania? The first six months of the pandemic cost on average a quarter of total sales (Figure 1). Companies reported a significant drop in sales during the first wave, on average between 21 percent in Poland and 31 percent in Bulgaria. Some of the losses were recovered in late 2020 and early 2021 (Figure 1), but will this nascent rebound be sustained and how long will it take to return to pre-pandemic levels? The next waves of surveys will provide information on this, but there is reason to be cautious about the recovery given that the second wave indicates companies were returning to their pre-pandemic trajectories.
Who suffered the most? Looking at countries and sectors, we find (Figure 2) the companies that experienced the greatest decline in sales during the first phase of the pandemic are also those that have recovered the most as the pandemic has recovered. crisis unfolded, once the short-term shock and the initial blockages had subsided Figure 2). This trend is constant in all three countries. However, comparing between countries, we find that Polish companies have recovered faster than those in Bulgaria and Romania for each level of initial decline in sales (Figure 2, the yellow line representing the results of Polish companies is at above the lines of Romania and Bulgaria). This inverse relationship between recovery and lost sales is preserved when comparing firms by sector (Figure 3). The lockdown has clearly affected businesses in different sectors in heterogeneous ways, with those in the hospitality sector being hit particularly hard compared to professional services that could continue to work from home. The services sector emerges as being both the most affected but also the sector that experienced the most significant rebound during the second wave (nearly 13 percentage points against 7 percentage points for retail trade and industry). ).
Look at small and young businesses
Beyond the aggregate analysis, at national and sectoral level, we note that certain companies have been particularly affected. We find that businesses of all sizes suffered significant sales losses, but the magnitude of the shock changes linearly with size: the drop for micro-businesses (0-4 employees) was twice as large as the drop for the employees). Likewise, there are significant differences correlated with the age of companies. Younger businesses experienced the largest drop in sales (40%), while established businesses (10 years or more) experienced a similar drop in sales, of around 26%. We also find that these two dimensions are correlated but independent to explain the exposure of companies to the COVID-19 shock, that is, the smallest and youngest companies have been the hardest hit by the pandemic. .