2023-11-07 15:33:00
Romanian managers’ confidence in the economy fell, in the second semester of this year, to 48.1, an average level close to that recorded at the beginning of last year (47.8), according to the latest results of the CONFIDEX S2 2023 study, published by Impetum Group.
Andrei Cionca, CEO of AttackPhoto: Assault Group
The drop in confidence comes amid new fiscal measures and expectations of a slowdown in the national economy. The most pessimistic sectors are agriculture (45), industry (47.4), construction and trade (both with 47.8). At the opposite pole, the most optimistic sectors are energy (50.7), IT (50.4) and services (49.8).
According to the CONFIDEX study from the second semester of 2023, the main concern of Romanian managers is related to the new fiscal measures and the increase in taxes, with 31% of the participating businessmen declaring themselves worried in this regard. At the same time, 36% of the managers participating in the study estimate that their businesses will be affected to a large and very large extent, while 39% are preparing for a medium impact. Only 21% of managers said that the tax measures will affect them to a small extent, very little or not at all.
What are managers’ expectations for the next 6 months?
After the fiscal measures, other concerns of Romanian entrepreneurs for the next six months, according to the CONFIDEX S2 2023 study, are the lack of working capital and cash flow (15% of respondents, in strong advance from 5% at the beginning of the year), the increase the cost of raw materials and utilities (12%, from 9%), declining sales, a reduction in the number of customers and orders (28%, up slightly from 27% in the first half of this year) and the lack of labor ( 15%, which is, however, down from 27%).
Regarding the outlook for the national economy over the next six months, more than 60% of managers believe it will get worse and are already preparing for more difficult working conditions, or even a recession, which would follow the trend of markets in the region and area euro.
Larger companies are more optimistic
Although the general impact of the new fiscal measures is perceived in negative terms, at the individual level the situation is more weighted, CONFIDEX data show. The level of the confidence index is different depending on the size of the company: the higher the turnover, the more optimistic the managers are. Businesses with a turnover of over 10 million euros have an index of 51.2, almost 12% above the representative index for companies with a turnover between 100,000 and one million euros, located at 45.8.
“The CONFIDEX results reflect again, in a realistic manner, the state of mind in the Romanian economy. If in previous editions we talked about a series of factors that sharpened the senses of Romanian managers, such as the pandemic, the war in Ukraine, inflation or the labor force crisis, this time, the fiscal news left their mark on the perception and expectations of managers. The optimism of the first part of this year has dissipated, giving way to caution. However, if we look segmented, it is observed that the value of the mood index of the managers who run large companies, with a turnover of more than 10 million euros, is more than 10% higher than in companies with a turnover of less than 1 million Of euro. These figures indicate a greater degree of stability of large businesses in the face of environmental uncertainties. It is a signal that indicates the need for investments in the direction of consolidating the position in the market for companies whose strategic objectives are development and scaling”, said Andrei Cionca, CEO & Co-founder of Impetum Group.
What opportunities do Romanian managers see in troubled times?
In this economic context, 55% of Romanian businessmen declare themselves open to exploring alternative sources of financing, beyond internal financing methods (profit reinvestment or capital injections from shareholders). Cost control and reorganization also represent an opportunity for 10% of managers, on a par with accessing European funds.
Given that access to credit is problematic for a quarter of the managers participating in the study, they are open to other sources of financing such as investment funds, business angels or other entrepreneurs, oriented to invest in already established companies. The CONFIDEX study shows that 80% of managers have a good and very good opinion of these sources of business financing.
“Every time our economy faces difficulties, companies are put in a position not only to adapt, but also to discover new opportunities, which did not exist or were not very visible during periods of calm. It is more necessary than ever to discuss anti-fragility mechanisms for Romanian entrepreneurship which, to any shock wave, is much less resilient than the large multinationals. Therefore, the need for financing and development of Romanian businesses opens the way to exploring alternative sources of financing that can cover the needs of managers, especially in these periods when the economy is tense”, said Andrei Cionca, CEO of Impetum Group.
Other opportunities targeted by Romanian managers are, according to the latest CONFIDEX study, the increase in market demand (18% of managers, compared to 15% in semester 1 2023), product diversification and development (15%, up from 9%) and easier access to markets and international expansion (down from 19% to 11%).
CONFIDEX is the only longitudinal study in Romania designed to measure the confidence of Romanian managers in the economy and to decipher the challenges faced by the local business environment. Having reached the 9th edition, the study has become a landmark tool for making business decisions.
Conducted by Impetum Group, the study tries to provide, for over 3 years, a clear picture of the perceptions of Romanian business people. By extrapolating trends, the company makes available to those interested a tool that helps them better understand the times we live in and make correct and well-reasoned decisions, with a positive impact on the business environment and society in general.
Over 2,500 entrepreneurs and C-Level executives have contributed, in 9 editions of CONFIDEX, to the establishment of extremely important milestones for the Romanian economy, valuable in uncertain times, such as the ones we are currently experiencing.
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