ZAGREB (Croatia), June 16 (SeeNews) - The war in Ukraine will impact the Croatian companies more than the EU average because of their exposure to higher energy prices, a research by the European Investment Bank (EIB) showed.
“Firms in countries close to Ukraine, such as Hungary, Poland, Latvia and Lithuania, feel the pressure the most. Moreover, firms in Greece, Croatia and Spain are also more affected than the EU average,” the EIB said earlier this week in a research entitled, “How bad is the Ukraine war for the European recovery?”.
Figures on the energy intensity of production in the different EU members, taken from OECD input-output tables, range from a low of 2% of production in Luxembourg to a high of more than 14% in Lithuania, Greece and Croatia, which can be explained by the sectoral composition of the economies and their overall energy efficiency, EIB said in the the report. Croatia's energy intensity of production is estimated at 16%, the highest in the EU, according to the the report.
"EU firms were weakened during the COVID-19 crisis, especially smaller ones. Their ability to withstand the withdrawal of policy support was already uncertain," the EIB said. It considers that the war will exacerbate firms’ vulnerability through three channels: a reduction in exports, lower profit due to higher energy prices, and difficulty finding funding as banks avoid risk.
Firm-level simulations conducted by the EIB suggest the proportion of firms losing money will increase from 8% to 15% in one year, and that the share of firms at risk of default will rise from 10% to 17% over the same period. Chemicals and pharmaceuticals, transport, and food and agriculture are the sectors hardest hit, it added.