BUSINESS

EY Romania barometer: Business sector’s confidence in Romanian market’s evolution approaches 60 pc

The business sector’s level of confidence in the evolution of the Romanian market consolidated at the start of this year and is approaching 60 percent, the highest value measured since 2012, according to EY Romania’s biannual business sector barometer.

The percentage of those who are very confident in the market’s growth outlook grew almost 2.5 times in the last two years, reaching 17 percent of the respondent businessmen.

According to the survey, the respondent companies turn out to be more confident in their own growth than in the growth of the sector they are active in. Businessmen who consider that the sector will register a positive trend (60 percent) are fewer than those who believe their businesses will grow (77 percent). Basically, companies that represent the 17 percentage point difference are confident that they will go against the trend, growing despite the fact that the market they are active in will not do the same, the aforementioned source points out.

“Growth through consumption, as an effect of tax cuts and the hiking of public sector salaries, has to be backed to a larger extent by investments and productivity growth. Businessmen have already planned to boost investments. Basically, only 4 percent of companies will lower the level of investments in 2016, 15 percent will maintain them at the level registered the year before and 81 percent will raise them. 45 percent have budgets growing by 5-20 percent, and 11 percent will have investment budgets over 20 percent higher compared to 2015. Against the backdrop of investments being on an upward trend in the intentions of businessmen, cost reduction falls in the order of priorities, improving productivity becoming the focus area for the business sector this year (27 percent of respondents),” EY Romania points out.

According to the company, Romania’s strong points are her industry, IT sector and agriculture.

Since 2008, 3.5 million jobs have been lost in manufacturing industries at European Union level, the pressure on prices lowering the companies’ margins in most Union member states and the manufacturing industry’s contribution to the EU’s GDP has dropped. Romania is above the European average when it comes to industry’s contribution to the gross added value, reaching 25 percent in 2013, following the growth registered in 2009-2013. By accelerating the Romanian industry, by attracting foreign investments but also the much-discussed investments in infrastructure, Romania can hike its export-based growth, the company considers.

The IT sector is in the midst of expansion, with a GDP contribution that surpassed that of agriculture in 2015 – also against the backdrop of a weaker agricultural year. With a contribution of 0.6 percent to economic growth in 2015 and an upward trend when compared to 2014, but also ranking Romania the 13th most important location for global services (a jump of 5 places in just two years, according to a global report), IT can become a more predictable economic growth engine than agriculture.

EY is one of the biggest professional services companies at global level, with 212,000 employees in over 700 offices in 150 countries and revenues of around USD 28.7 bln in the fiscal year that ended on 30 June 2015.

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