The CONFIDEX H2 2024 study shows a relatively stable year without major events that could significantly impact Romania’s economy, but leaves room for growing concern regarding the future.

According to the study, supported by private equity funds ROCA, AGISTA, and CITR, the leader in Romania’s insolvency and restructuring market, only 29% of managers report optimism about the economy, a drop from 34% in the previous semester. Conversely, 34% of respondents express concern, a 6-percentage-point increase compared to the first half (H1) of 2024. 

Despite this, at the macro level, the second half (H2) study is consistent with the H1 findings, reflecting a stable year.

“Each edition of the CONFIDEX study reveals a seasonal pattern: business confidence in the economy tends to peak in spring, while pessimism emerges at year-end,” says Andrei Cionca, co-founder of private equity funds ROCA and AGISTA, and initiator of the CONFIDEX study.

Resilience and Improved Investor Appreciation

The 11th edition of the study, shaped by the responses of nearly 700 business leaders, places the CONFIDEX Index at 52%, comparable to H1 2024.

“Despite facing unpredictability, they remain optimistic and solution-oriented - pursuing product diversification, digitalization, and growing trust in investors. This proactive attitude is crucial for fostering resilience and positioning Romania as a pillar of growth and stability in the region,” the initiator of the study says.

Aside from resilience, managers also found a growing appreciation for investors. Currently, 81% of managers report a positive or very positive opinion of investors, a trend confirmed over the four years analyzed with the help of the CONFIDEX study. Managers credit investors with contributing to the financial stability of the companies they invest in (70%) and strengthening business operations and management structures (60%). 

“The Romanian business community is becoming increasingly aware of the need for a robust ecosystem that facilitates capital inflow into strategic sectors while enabling investors to play an active role in local economic development,” explained Andrei Cionca. 

Increased Caution 

At the same time, the registered responses highlight a cautious approach toward the current economic environment. The majority of managers (56%) anticipate rising inflation, while 1 in 3 expect Romania’s GDP to decline in the coming months. Additionally, 49% foresee an increase in unemployment, and 53% anticipate a depreciation of the Romanian leu against the euro, heightening concerns over financial stability.

Even more alarming is the fact that 1 in 3 managers reports that their company’s situation has worsened, and half expect further deterioration in the next six months. 

According to CONFIDEX, the most optimistic sectors include services (confidence index: 52.7), IT (52.9), and transportation, distribution, and warehousing (52.3). In contrast, agriculture (45.7) and energy (49.3) show more cautious outlooks. 

Managers expect employee numbers and financing costs to remain stable. However, they foresee rising production and operational costs, along with increased sales prices, which raise concerns about profitability. 

As such, 46% of companies predict declining profit margins, while 73% of respondents anticipate higher production and operating expenses over the next six months, and 61% plan to raise product and service prices, while only 42% consider investments in their companies during the same period. Business priorities include sales growth (49%), employee retention (27%), digitalization and automation (27%), customer relationship improvements (25%), and access to financing (21%). 

The key opportunities identified by Romanian business leaders include introducing innovative technologies (79%) and exploring new markets and clients (72%).

radu@romania-insider.com

(Photo source: Confidex)