Romanian managers expect overlapping crises but are more optimistic for the future, survey shows
Managers of Romanian companies active in the most important business sectors are increasingly optimistic for the future, despite foreseeing a series of problems such as the devaluation of the national currency, rising inflation, and a prolonged energy crisis.
The conclusion is included in Impetum Group’s most recent Confidex survey, which began during the pandemic. The survey aims to measure the perception of Romanian managers on the macroeconomic climate. Over 500 managers overseeing companies of varying sizes in 6 sectors of the economy (industry, construction, agriculture, commerce, transportation, and services) were interviewed. 75% of the companies included in the survey have a turnover above EUR 1 mln. Nearly a third have a turnover of over EUR 5 mln.
The sector with the most obvious shift in terms of confidence is the agricultural one. Romanian managers of companies in this sector were, at the end of 2020 and the beginning of 2021, the most concerned about the future, having to face a severe drought over the spring and summer. At the moment, they make up the most confident cohort in the survey, while those in construction were the most worried, a constant since last year.
Managers in services expressed a steadily increasing degree of confidence in the success of their businesses from 2020 until now. Those in the industrial sector, however, are close to historical lows in terms of confidence, showing extreme worry due to increased energy costs.
Overall, the average confidence score among managers was 5.1, with those of the largest companies being even more confident, scoring an average of 5.5. Managers are also more relaxed, with only 27% expressing worry – compared to 39% in the first semester of 2021.
Paradoxically, the same increasingly confident managers believe, according to the survey, that the larger economic outlook is bleak. Roughly 43% believe that Romania’s GDP will drop in the following three months, and 9 in 10 managers also believe that Romania will see a deepening inflation. 84% expect a prolonged energy crisis.
Increased unemployment, a drop in private investments, and a decrease in the local capital markets are also foreseen.
“Romanian managers expect a recession, an energy crisis, and a devaluation of the leu against the dollar, and yet their mood has risen. Overall, they are more relaxed,” said Andrei Cionca, CEO of Impetum Group. “The question we ask ourselves is whether this relaxation comes from a better level of preparation, at the level of the business environment, and an increase in the degree of resilience and confidence coming from the managers who believe they can overcome even bigger challenges, or whether they are just adopting a reactive attitude to an upcoming intervention from the state seeking to solve problems.”
The survey also shows that nearly a quarter of Romanian managers, regardless of the sector, believe that the situation of the company they oversee has improved in the last 6 months. Relatively larger shares of managers, however, believe that the status of their companies either remained unchanged (39%) or worsened (36%).
More than three out of four managers believe that the national economy is now worse than it was half a year ago, and 79% believe that the whole European market is worse off. Slightly more than half, on the other hand, have the same opinion of their sector of activity.
Most of the managers surveyed believe that 2023 will be a year of trials, and 2024 one of recovery. A majority of them would invest their money in their own businesses before anything else.
Nearly a quarter of the companies surveyed made no hires in the recent period. On average, each company hired 16 new people. A third continued the investments they had planned, while on average companies put 36% of their investments on hold for the moment.
Despite all the talk about digitalization, a quarter of companies made no investments in it. Another quarter of companies invested a maximum of 5% in digitalization.
When it comes to countering the effects of the energy crisis, 21% of managers turned to PV systems. Worryingly, slightly more than half of the companies took no measures to combat energy price hikes.
The surveyed managers worry most about price hikes in raw materials, rising inflation, and low sales. Most are looking to cut costs, optimize operations, and diversify. More than two-thirds believe that the war in Ukraine will impact their business through energy costs and more expensive raw materials. Only 4%, however, worry about the Ukrainian and Russian markets being inaccessible.
Almost two-thirds of companies are also feeling the pressure for higher wages from employees.
When it comes to future growth, four in five Romanian managers want to access new markets in the coming period.
Finally, the Confidex index, which aggregates 38 factors pertaining to the perception of the business sector in Romania, stands at 44, after being at 40.7 in the second quarter of 2020 and 41.4 in the second semester of 2021. The most confident managers (47.2) are in agriculture, and the most cautious (42.3) are in the industrial sector. The index is close to 2020 lows, with managers in almost all sectors less confident than at the beginning of the year.
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