EU4Business Weekly Digest of Reports on Economic Impact on SMEs in EAP

14/04/2020

Armenia

The spread of coronavirus disease "due to anti-epidemic measures will significantly reduce Armenia's economic growth in 2020," the CB analysts said. In 2020, economic growth will be 0.7% and will recover in 2021, reaching 7.2%. https://bit.ly/civilnet-am
Coronavirus caused $134 million damage to the tourism industry of Armenia in the first quarter of 2020. The State Tourism Committee states that the situation would get worse in the second quarter. "Many business entities voice their intention to close businesses". https://bit.ly/news_agency
SMEs can receive soft loans for 36 months, and agriculture will be provided with 0% loans and compensation. SMEs operating in the fields of tourism, healthcare, housing, catering, processing industry, whose turnover in 2019 was in the range of 24 million-500 million drams, and the turnover of one quarter of 2019 in the whole year 10 more than a percent. https://bit.ly/3aVuufI
As of April 8, 2020 Loan Breaks were given to 5,300 business in the amount of 15.4 billion AMD (approximately $ 30.8 million), PM of Armenia made a post on his Facebook page. https://bit.ly/news_am
Webinar series #BusinessagainstCOVID19 to provide advice in crisis situation by consultancy companies that were partners with the EBRD Armenia in previous projects. These webinars will offer practical knowledge and tools for SMEs to overcome the situation. https://bit.ly/2K3tc6G
A digest of EBRD news in regard COVID19 – financing and other opportunities from EBRD Advice for Small Businesses in Armenia https://bit.ly/SME-advice-digest

Azerbaijan

One billion manat [$588.2 million] was allocated to improve the economic situation of students and other citizens and to support economic entities affected by results of coronavirus, according to Azerbaijani Deputy Minister of Economy Niyazi Safarov. The funds are expected to be increased to 2.5 billion manat [$1.5 billion]. The assistance will be given to 600,000 entrepreneurs. https://bit.ly/trend-az
Tariff concessions and other measures will be applied in Azerbaijan to boost export-import operations. The aim is to support local business during coronavirus pandemic. https://bit.ly/fed-az
Azexport portal encourages entrepreneurs to use Internet more actively to sell their products amid coronavirus pandemic. https://bit.ly/azexport

Belarus

Despite no quarantine conditions within Belarus, it’s impossible for business to hold out without income for a long time. Small and medium-sized businesses began to sound the alarm in mid-March. Travel agencies, restaurants, hotels and other institutions that were left without work asked the authorities for temporary exemptions: lowering the rental rate and introducing tax holidays. https://bit.ly/kp-by
About 500,000 Belarusians working in small or medium-sized businesses will be out of work if measures are not taken.https://bit.ly/kp-daily-1
Now hotels are experiencing the same difficulties as the entire tourism business: occupancy rates have dropped from 50% to 5% or even lower. https://bit.ly/realt-onliner-by
Sales in online stores rose by 19% in February as compared to January. Hygiene products are in high demand now. Medical masks are being ordered almost 10 times more often than in February last year. https://bit.ly/kp-daily-2
The National Bank recommended to commercial banks to give the credit holidays for people and businesses because of the coronavirus. But no more specifics followed. And now the base rental rate has increased, which was an unpleasant surprise for business. https://bit.ly/kp-by-3

Georgia

European Business Association Georgia (EBA) undertook on-line “Rapid Reaction Poll” of over 100 CEOs. 33% of businesses state their revenues will decrease by 20% due to Coronavirus. In order to continue to operate, government should provide: corporate tax rebate, aggressive job credits scheme, training grants and incentives for up skilling, bridging loan programs and subsidies and relief for import/ export. https://bit.ly/bm-ge
Research by Galt & Taggart on economic impact of coronavirus, the most positive scenario is $1.7 billion loss. https://galtandtaggart.com/upload/reports/10039.pdf
Economic impact of COVID-19 will be unemployment in tourism sector, namely hotels and restaurants, employing 44 000 people; trade, automobile, manufacturing and repair of goods employing 187 600, etc. Exports from Georgia decreased in February substantially by 17.9% as compared to the same period of the previous year. https://bit.ly/eprc-ge
The government of Georgia already implements measures to support people left unemployed due to Covid-19 – commercial banks proposed grace period on loan repayment and the government finances utility bills for 1.2 million households, within the period of 3 months. https://bit.ly/bm-ge-1
The EBRD has made available an emergency Solidarity Package of €1 billion for its existing clients across 38 economies, including clients in Georgia. https://bit.ly/ebrd-crisis

The Republic of Moldova

Moldovan businesses are in panic because of quarantine measures imposed by authorities in the context of the coronavirus pandemic. The most affected businesses are: Restaurants/Bars – incomes have been reduced by 80%; Travel agencies – holiday orders have been reduced by 30%; Hotels, Hostels and owners of apartments – all hotels and hostels in Moldova are practically empty; Clothing companies – since March, textile orders have decreased by 35-60%. Businesses are forced to work remotely meaning the productivity is reduced by at least 30-40%. https://bit.ly/2RhPTbb
Expert Panel says that due to the pandemic and total isolation, the GDP in Moldova will be reduced by 10% in 2020. https://bit.ly/39Pcr9J
The government prepared a draft law for emergency measures: increase in unemployment benefit, subsidising salaries; exemption from the payment to patent owners who ceased activity during the emergency; reduction in VAT rate from 20% to 15% for the HORECA sector, postponing the payment of local business taxes https://bit.ly/2xYlVCA
The online platform Rediscover Moldova has launched the initiative "We support local businesses". With the support of a commercial bank, 50 local businesses will be selected which will quickly and easily receive an online payment or with a bank card. At the same time, the bank will give them financing for a promotional campaign. https://bit.ly/39Ou7lS
Solutions for online promotion of SMEs – "Iarmarocul IMM-urilor" – a group created on Facebook to support the business environment in the sale of products and services under the current restrictive conditions. In just a few days, more than 2000 entrepreneurs from all over the country joined the group. https://bit.ly/3bZkPFm

Ukraine

Half of SMEs will not survive after 1 month in Ukraine: 60% of business owners continue to operate under restrictions (mostly large and medium-sized businesses), while another 29% quit (typical of microbusiness). At the same time, 51% of enterprises are able to hold for only 1 month, and every fourth business – to withstand 2-3 months of work in quarantine conditions and not go bankrupt. 6% of entrepreneurs have completely closed the business, mostly micro and small businesses are in this category. Only 3% of respondents indicate that their business will be able to work for a long time. One-third of business owners (mainly micro-) claim 90-100% drop in revenue since quarantine. These same entrepreneurs have already laid off up to 50% of staff. Small and medium-sized business owners are talking about a 25-50% decrease in revenue compared to the pre-quarantine period and have already laid off 10 to 25% of employees. NGO “SUP” Survey https://sup.org.ua/uk/news/419
EBA reports 18% of respondents consider closing their businesses and 78% report losses of income up to 75%. Due to the slowdown in business activity, small business will have to reduce the staff size and cut the salaries, 41% plan to adjust the staff salaries, 33% have not yet decided, and 26% of business owners will keep the current size of salaries. It will be necessary to reduce the number of employees in 31% of enterprises, while 21% are undecided and 48% of respondents do not plan any staffing cuts. https://bit.ly/eba-research
NBU reports 34% decrease in number of vacancies in Ukraine during quarantine. 77% of enterprises are not going to fire employees. https://bank.gov.ua/admin_uploads/article/Week_in_review_2020-04-02.pdf?v=4
The President discussed the creation of tools for lending to new entrepreneurs and supporting the existing ones through repayment holidays and offsetting interest on loans so as not to increase the number of overdue loans. https://bit.ly/2yEJ4Ko

EU4Business Updates

Helping companies go digital in times of elf-isolation (Georgia)

Today, when all around the world people are practicing self-isolation and social distancing, some small businesses are doing their best to re-arrange their operations. Some do so successfully with tools made available with help from the EBRD and EU4Business.