Confidex business confidence index: New fiscal measures drag down Romanian managers’ confidence
The Romanian managers' confidence in the economy declined in the second half of this year after the new fiscal measures adopted by the Government. The Confidex Index, published by the local Impetum Group after surveying 550 managers of companies of all sizes active in Romania, stands at 48.1 out of 100 in H2 of 2023, down from 50.2 in H1.
While the first half of the year was defined by high optimism and fewer worries regarding inflation or the war in Ukraine, the second half shows that managers anticipate more pressure on the bottom line of their companies.
The decrease in confidence is attributed to the new fiscal measures and expectations of a slowdown in the national economy. The most pessimistic sectors include agriculture (45), industry (47.4), construction, and trade (both at 47.8). On the other hand, the most optimistic sectors are energy (50.7), IT (50.4), and services (49.8).
Roughly a third of business participants expressed worry regarding the new fiscal package. A third of the managers participating in the study also anticipate that these fiscal measures will significantly or very significantly affect their businesses, while 39% are preparing for a moderate impact. Only 21% of managers believe that the fiscal measures will have a small, very small, or no impact on their businesses.
After fiscal measures, other concerns among Romanian entrepreneurs for the next six months, according to the study, include the lack of working capital and cash flow (15% of respondents, significantly up from 5% at the beginning of the year), rising raw material and utility costs (12%, up from 9%), declining sales, fewer customers and orders (28%, slightly up from 27% in the first half of the year), and the labor shortage (15%, though this is down from 27%).
Over half of the surveyed managers believe the outlook for the national economy of Romania will deteriorate over the next six months, following market trends in the region and the Eurozone. The situation at the individual level is more moderate. The confidence index varies depending on the size of the company: the larger the turnover, the more optimistic the managers. Businesses with a turnover of over EUR 10 million have a confidence index of 51.2, nearly 12% higher than the representative index for companies with turnovers between EUR 100,000 and one million, which stands at 45.8.
"In this economic context, 55% of Romanian businesspeople express openness to exploring alternative sources of funding beyond internal financing methods, such as reinvesting profits or shareholder capital injections. Cost control and reorganization also present an opportunity for 10% of managers, on par with accessing European funds. As a quarter of the managers participating in the study face challenges accessing credit, they are open to other sources of funding, such as investment funds, business angels, or other entrepreneurs interested in investing in established companies. The CONFIDEX study shows that 80% of managers have a positive view of these sources of business funding," said Andrei Cionca, CEO and co-founder of Impetum Group.
Other opportunities targeted by Romanian managers, according to the study, include market demand growth (18% of managers, up from 15% in the first half of 2023), product diversification and development (15%, up from 9%), and easier access to markets and international expansion (down from 19% to 11%).
In its ninth edition, Confidex is the only longitudinal study in Romania aimed at measuring the confidence of Romanian managers in the economy and decrypting the challenges faced by the local business environment.
Impetum Group is a Romanian group that brings together capital, management, and services, comprising CITR, the market leader in Romanian insolvency, ROCA Investments, a private equity solution that aims to consolidate and scale Romanian SMEs with potential, ROCA X, venture capital for disruptive technology startups, and Agista, a growth equity fund focusing on companies that have demonstrated sustained growth with limited resources in their respective niches and aim to accelerate their scaling both nationally and internationally.
(Photo source: Impetum Group)
