Romanian entrepreneurs expect stagflation for at least a year

Almost half of the business people, managers and top executives in Romania expect the country to enter a period of stagflation, a Moneycorp survey revealed.

Stagflation occurs when unemployment and prices rise simultaneously, but it is also used to designate a shrinking economy and very high inflation. Either way, the same effect is produced – low demand, high prices.

Roughly 26.7% of respondents were even more pessimistic, saying that they believe a recession is coming. Only one in five were optimistic regarding the possibility of continued growth.

When asked about the most serious challenges to Romania’s economy, a third of respondents pointed at inflation and the subsequent rise in prices for energy and building materials.

A quarter of top managers worry foremost about a dip in sales, while 12.5% fear bankruptcy of their business partners.

Only one in ten believe that the war will directly impact the region.

“The rise in operating costs rightly represents the main concern of companies in 2022,” said Cosmin Bucur, managing director for Moneycorp Romania, quoted by Economedia.

The same survey showed that a third of companies believe that the annual inflation rate in Romania will remain around 14-17%, while roughly a quarter think it will be nearer the 18-20% levels.

A plurality among managers believes that the RON to USD ratio will see the first increase in value, establishing an exchange rate of RON 4.4 for USD 1 (RON 4.7 for USD 1 at the time of writing), while a third expect the euro to stabilize around RON 4.95.

Most executives surveyed (33.3%) see a stabilization of risk factors such as inflation and rising interest rates only in the second half of next year, while 26.7% are even more pessimistic, indicating a first positive signal in this area to occur only in the first half of 2024.

(Photo: Yurii Kibalnik | Dreamstime.com)