Reunion Island businesses strong during the crisis

A new study from the Issuing Institute of Overseas Departments, published at the end of January, analyzes the way in which Reunionese companies coped with the health crisis in 2020. Reunion businesses suffered it head-on, with a drop in their turnover of 3,7% in 2020 compared to 2019. This drop is almost half as strong as that observed in mainland France. (-7,8 %). It affects mid-sized companies more (-9,3 %) and tourist activities (-34,6 %). The profitable capacity of Reunion companies is less affected than expected, due to adjustments made to their intermediate consumption and support measures. Companies took on significant debt in 2020, by taking out loans guaranteed by the State in a precautionary manner. Indeed, a large part of the borrowed sums came to strengthen the treasuries, notes Iédom. The decline, even light, of company margins in 2020 associated with the significant increase in their debt could raise fears of an increase in their financial vulnerability. However, these concerns remain moderate. Only 4% of companies show strong signs of vulnerability. Conversely, a large majority demonstrated resilience during this exceptional crisis. “Reunion companies seem rather equipped to face these uncertain times”, concludes Iédom.