SMEs' Survey and Confidence Index (August 2020)
The pandemic brought a halt to the upward trend of the confidence index, which returned to negative territory after 5 positive semesters. According to the new edition of the NBG SMEs' survey, the confidence index suffered a sharp drop (34 units) during the 1st semester of 2020, and returned into a negative field (-8 units), approaching the levels of the previous crises (start of the recession in 2009 and imposition of capital controls in 2015), while the deterioration in the index is a common feature across all business sizes.
The impact of the pandemic on economic life and the consequent uncertainty have taken a severe toll on SMEs' expectations for the future. Specifically, the future demand index retreated 87 points (the biggest drop between successive 6-month periods in aggregate and across business sizes), while also posting the lowest performance of 10 years (-45 points). In addition, the percentage of SMEs targeting growth has fallen back, having retreated to 37% of the sector in 2020H1 (from 71% in 2019H2) – levels not seen since 2015. To take a closer look, the sectors with the largest percentage of companies struggling to survive are the car trade, tourism and retail trade (57%, 47% and 43% of their sectors, respectively).
Successfully riding the current storm requires the right mobilization of the defence capabilities of SMEs. Thus, for the 1/3 of companies that have enjoyed improving* sales performance, liquidity and profitability, it will be easier to meet the challenges of the times. Conversely, an equivalent proportion of businesses find themselves in a worse position, requiring more energetic support in order to weather the impact of the pandemic. When we look at the various business sizes, medium-sized businesses clearly present the best picture (45% in better condition), while micro enterprises are likely to face more serious difficulties (with 47% in worse condition).
At a sectoral level, tourism** stands out more positively thanks to the previous decade of strong growth (61% of SMEs in better condition), thus giving room to absorb some of the heat of the current crisis, which is impacting the sector with particular intensity. The food sector also stands out positively (43% of SMEs in better condition), which has sustained its export dynamic throughout the pandemic. By contrast, retail, clothing and other industries appear to have less strong lines of defence and will require more determined support, as the share of businesses that are worse off than in 2008 amounts to more than 50% of the sector.