Deloitte: Romanian companies concerned, but more optimistic than Central European ones

Romanian companies are concerned about the slowdown in economic growth, the expected increase in unemployment, and high inflation, but they are generally more optimistic than their counterparts in the Central European region, according to the Deloitte 2023 Romania CFO Survey.

The survey reveals a sharp drop in the Romanian CFOs’ economic growth expectations, as only 17% of the respondents believe the economy will grow by more than 2.5% in 2023, compared with 57% of last year’s participants. The majority of the surveyed CFOs (57%) expect economic growth of a maximum of 1.5%, which shows more optimism than across the Central European region, where nearly three-quarters (73%) of the participants see economic growth of less than 1.5% for their country this year.

More than half (55%) of the Romanian CFOs believe the economic conditions will deteriorate and lead to higher unemployment this year, compared with just a third (33%) last year. However, in this case, too, the change is less dramatic than in the CE region, where the percentage of CFOs expecting higher unemployment more than doubled from 33% to 68%, with particularly negative prospects in Poland, Hungary and the Czech Republic (over 85% of respondents).

Almost two-thirds (63%) of Romanian CFOs expect the inflation level to further increase in 2023, amid supply chain disruptions that pushed up the prices of raw materials, commodities, energy, and transport, which have ultimately led to higher consumer prices. The local expectations are in line with the CE results (70% of respondents), but the percentages are lower than last year when over 90% of the CFOs based in Romania and Central Europe expected increases.

“It is important to highlight, though, that the survey captures CFOs’ expectations at the end of 2022, when IMF and World Bank economic forecasts were more pessimistic than now, and that the respondents in Romania have shown more optimism than their Central Europe peers, fueled most likely by the macro-economic forecasts for the region, which indicate Romania will remain among the performers amid a regional economic slowdown,” said Zeno Caprariu, Audit Partner, Deloitte Romania, and coordinator of the CFO Program in Romania.

Companies in Romania expect further cost increases across all categories, especially workforce costs (94%), due to higher salary demands from employees struggling with the effects of high inflation, production, and service delivery costs (90%), transportation costs, and cost of debt (88% each). The only stable costs, according to local CFOs’ estimations, are VAT and corporate tax, indicating a sense of fiscal stability.

More than half (55%) of companies based in Romania feel a high level of uncertainty, in line with the trend across the region, which makes CFOs more risk-averse.