Trade credit insurance company Allianz Trade, formerly Euler Hermes, downgraded four sectors of the Bulgarian economy in its regular report for the third quarter of 2022, Allianz - Bulgaria said on Friday. Energy, Chemicals, Retail, and Machinery moved from the "yellow" medium risk zone to the "orange" sensitive risk one, which is an indication of a worsening outlook for late payments and bad debts of companies in these industries.
The reasons for this are largely related to the state of the European economy and expectations of a global recession. Reduced consumption and rising producer prices due to energy price spikes are worsening opportunities for the chemical industry. The situation is particularly worrying for producers of household chemicals, which are finding it difficult to market their products at higher prices to end consumers. Profits are expected to shrink significantly compared to previous quarters. This is compounded by the risk of production bottlenecks due to unstable Russian gas supplies.
This latest report by Allianz puts 12 Bulgarian industries in the orange zone and 5 in the yellow one. Only Software and IT Services is in the "green" low-risk zone, while no Bulgarian industries are in the red high-risk one.
Kamelia Popova, country manager for Allianz Trade Bulgaria, said, "The revision of the risk ratings of four major sectors is definitely a warning for business in our country, as well as a reminder that we cannot operate as a stand-alone ecosystem in a global economy".
Despite the downgraded sector ratings, Allianz Trade kept Bulgaria's credit rating unchanged at B2 or "moderate risk". Eight other countries saw their ratings downgraded, including Lithuania, Latvia, and Estonia.
/RY/
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