Welcome back Grey Zone. 2.0
InfoCredit Business Activity Index
In the first half of 2022, and mainly in the second quarter, entrepreneurs tried to adapt to the new reality. Inflationary, tax-war reality. There were more new and resumed business activities than in the same periods of 2021 and 2020. The problem is that there were much more suspensions and terminations of activities than in the previous two years. On the one hand, the cancellation of the epidemic and the lifting of restrictions brought new opportunities. On the other hand, the increase in tax burdens and costs forced many businesses to suspend and close.
Polish entrepreneurs, especially micro entrepreneurs, perfectly sense every business opportunity and every problem. We have been learning about this since the transformation. They have been building Poland’s GDP and economic success since 1989.
– Can’t you cope with the burdens with the current regulations? Back off. Is there an opportunity? Take advantage! This is how Polish entrepreneurs have approached work for years. In the last three years, with such huge volatility of the economy and business conditions, this has been clearly visible. So what if there are more new and resumed economic activities in Q2 than in the same periods of 2021 and 2020? There are many more suspensions and closures – says Jerzy Wonka, development director at the analytical company InfoCredit.
Let’s look at the data. There were 238,336 new and resumed businesses in the first half of 2022. This is much more than in 2021 and 2020 (229,276 and 223,220, respectively). Suspensions and terminations? 265,500 in the first half of 2022, compared to 198,485 in 2021 and 213,395 two years earlier.
We observed the greatest escape from business activity at the turn of 2021 and 2022. In January 2022, 26,528 applications were recorded to start a new business and 8,901 to resume it. 37,626 thousand entrepreneurs suspended their business and 27,235 thousand terminated it. No wonder, entrepreneurs were already afraid of higher tax burdens and confusion related to the Polish Deal. ZUS contributions also increased significantly – pension from PLN 615.93 to PLN 693.58 and disability from PLN 252.43 to PLN 284.26 (+12.61%).
– The data clearly shows what is happening in our economy. On the one hand, we have the opening and resumption of seasonal holiday businesses for the first time in three years without restrictions. On the other – an escape from rising costs, taxes, unpredictability. The reduction of the PIT tax rate from July 2022 for people settling in the first threshold could have had some impact on the opening of seasonal business activities – adds Jerzy Wonka.
Holiday business opportunities without restrictions related to the epidemic caused the Index describing the ratio of new and resumed activities to bounce back strongly. The problem is that the index describing the ratio of suspended and terminated businesses is diving again. Conclusions? Let’s prepare for turbulence in the third quarter. They will come in September and October, along with the increase in energy prices and the costs of doing business.
– Our last report after the first quarter of 2022 was entitled “Welcome back Grey Zone”. Not much has changed after the first half of the year. We are still heading towards the grey zone. Small businesses do not like a vacuum. They will do their thing. I am afraid that we are returning to the times when “cash is the king”. The problem is that this does not apply to the złoty. Our currency is becoming hot paper. With such high inflation, small entrepreneurs will again rush to exchange money earned in the grey zone – as in the 1990s – for dollars and francs, in order to lose as little as possible. The weak złoty, on the other hand, is an opportunity for those who cooperate with foreign entities and receive part or all of their remuneration in euro or dollars – says Jerzy Wonka.
And what is the state of economic activity in general? According to CEIDG data, three years ago there were 2,548,016 active business activities, including those conducted exclusively in the form of a civil partnership, compared to 2,601,617 at the end of the first half of 2022. This means that the number of active small businesses in Poland remains more or less constant. However, there was a sudden increase in suspended activities – from 449,296 after the first half of 2019 to 566,495 after the first half of 2019.
How do we calculate the InfoCredit Index?
The InfoCredit Index was created to track trends in micro-entrepreneurship, alternative forms of employment and self-employment at a time when the situation on the labor market and in individual industries is changing dynamically. The index, which is developed by the oldest company in Poland analyzing the economy, takes on a positive value when there are more new activities than closures. When there are fewer than closed ones – a negative value. In the same way, we also track the ratio of resumed to suspended activities.
