CONFIDEX Index: Romanian economy stable despite uncertain electoral year
<p>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.</p>
<p>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. </p>
<p>Despite this, at the macro level, the second half (H2) study is consistent with the H1 findings, reflecting a stable year.</p>
<p>“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.</p>
<h4>Resilience and Improved Investor Appreciation</h4>
<p>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.</p>
<p>“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.</p>
<p>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%). </p>
<p>“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. </p>
<h4>Increased Caution </h4>
<p>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.</p>
<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>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%). </p>
<p>The key opportunities identified by Romanian business leaders include introducing innovative technologies (79%) and exploring new markets and clients (72%).</p>
<p><em><a href="mailto:radu@romania-insider.com">radu@romania-insider.com</a></em></p>
<p><em>(Photo source: Confidex)</em></p>