Study: Romanian companies anticipate improvement of economic indicators, but are still prudent as uncertainty remains high


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Romanian companies anticipate improvement of macroeconomic indicators such as gross domestic product (GDP), inflation and unemployment, but seem to still adopt a prudent approach as uncertainty remains high, according to the Deloitte 2024 Romania CFO Survey, conducted at the end of last year among over 110 chief financial officers (CFOs) based in our country. Economic growth forecasts have slightly improved compared to last year, as Romanian CFOs expect an average GDP increase of 1.5% this year, higher than last year’s projection of 1.2%, but well below the forecasts issued by international institutions such as the European Commission and the World Bank. Nevertheless, the respondents are more optimistic than their Central Europe peers, who expect 1.1% average economic growth in 2024.

The majority of Romanian CFOs (60%) expect further increase in the consumer price index level this year, but their inflation expectations have tempered significantly compared to last year’s survey, from 11.2% to 6.75%, although they remain higher than the latest forecasts issued by the National Bank of Romania.

Most CFOs in Romania believe that rising costs will continue to put pressure on companies in 2024, especially when it comes to workforce (99% of the respondents), overall production and service delivery (86%), transport (78%) and business-related services (73%). A significant change compared to last year is that 70% of CFOs now expect expenses associated with corporate tax to increase, up from 22% in 2023, and half of the respondents also expect the costs associated with VAT to go up, compared to 27% last year.

On the bright side, significantly fewer respondents expect financing costs to rise this year (55%, down from 88% in 2023). Internal financing remains the preferred source of funding for 55% of the survey participants, and most of them lost interest in bank borrowing this year, which is considered attractive by only 21% of the respondents.

When it comes to unemployment, Romanian companies are also rather optimistic, as almost half (46%) of respondents believe this indicator will remain stable in 2024, up from a third (33%) last year.

“More than half of Romanian CFOs deal with high levels of external uncertainty, so they continue to be rather prudent, with 84% of the respondents believing that now is not a good time to take greater risk onto their balance sheets. Although two thirds of them are optimistic about revenue growth, their answers signal a preference for further enhancement of cost management to keep their companies’ results in good shape,” said Zeno Caprariu, Audit Partner, Deloitte Romania, and coordinator of the CFO Program in Romania.

Increasing regulations are the biggest risk identified by Romanian CFOs this year, according to 64% of the respondents, double compared to last year and significantly higher than the CE average of 38%. The other risk factors are the shortage of skilled professionals (46%, significantly down from last year’s 63%), the reduction in domestic demand (42%) and in foreign demand (34%) and geopolitical risks (31%).

As these risk factors create an environment characterized by high level of uncertainty, cost reduction is the top priority of a third of Romanian companies this year (37%). The other areas of strategic interest for Romanian CFOs are organic growth (21%), digitalization (9%) and growth in existing markets (8%).

The survey was conducted between October and December 2023.

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