- 77% of managers predict a drop in the EUR/RON rate, while 74% believe we will see an inflation on the rise;
- 30% of managers believe that we will continue to have a recession;
- The CONFIDEX index, which measures the confidence of managers in the economy, indicates a restrained optimism, but with a steady increase, to 47 in Q1 2021, from 45 in Q4 2020 and 41 in Q2 and Q3 2020.
- 25% of managers believe they will be affected by the increase in production costs;
- Managers still see a crisis in V, with a two-gear come back.
Managers’ confidence in the Romanian economy increased in Q1 2021, with a better perspective on its evolution in the upcoming months and only 17% of managers seeing a potential drop in the GDP (compared to 46% in Q4 2020). On the other hand, companies are beginning to face other challenges such as increased production costs, rising inflation and staff retention, according to the CONFIDEX Q1 2021 results published by Impetum Group.
“CONFIDEX Q1 2021 shows an improvement in confidence and mood among managers. The analysis of the companies’ main economic indicators also shows a positive evolution. However, although managers predict an increase in the GDP and unemployment, in 2021 we also notice the prediction of a year with higher inflation, amid rising prices for certain raw materials”, said Andrei Cionca, CEO & Co-founder Impetum Group.
Compared to Q4 2020, CONFIDEX Q1 points out to a profound change in the perception of the economic evolution: fewer managers believe that unemployment will increase (36% vs 54%), however inflation will – according to an increasing percentage (74% vs. 58%). Consequently, over 60% of the respondents claim they will rethink the company’s strategy, prioritizing investment in innovation and digitalization. Somewhat contradictory, there are more managers concerned with growing productivity as the main driver of economic recovery (more than two-thirds), while the number of those interested to invest in IT and R&D is declining.
Managers’ concern for sales growth is diminishing (-12%), while their concern for staff retention is evolving (+5%). They are interested in receiving banking support in terms of access to loans and lower interest rates.
“Compared to the forecasts from the beginning of 2021, managers are more cautious regarding the evolution of the turnover (-1%) and profit (-4%) by the end of 2021. We also see a 3% reduction in the number of employees. In terms of investments and production costs, the initial forecasts remain stable”, continued Andrei Cionca.
A new hierarchy of challenges
25% of managers are starting to feel the pressure of rising production costs, 36% mentioned declining sales as the company’s main concern while 33% indicated a lack of workforce.
Fewer managers feel that the current unpredictability may be a pressing issue (12% vs. 21% in Q4 2020) instead the need for state aid has increased (13% vs. 7%).
Mood per economic sector
Compared to CONFIDEX Q4 2020, the mood of managers in Industry, Agriculture and Services is improving. In Trade, the values are similar to those of the previous quarter.
Trade and Services Managers have managed to surpass other areas such as Agriculture, Industry or Construction, while those in Hospitality are still at the lowest average (-3.95), very close to the previous quarter.
Hospitality and Transport managers, the same as managers from companies with a low turnover, are the most pessimistic. On the other hand, managers in Services or large companies are the most optimistic.
Snapping back from the crisis
Managers still see a crisis in V with a two-gear come back, but the longer the pandemic the longer the come back, compared to previous CONFIDEX forecasts. In 2021, it seems that we will recover about half of the decline of 2020, returning to the pre-pandemic status only by mid-2022.
The estimated duration of the recovery of the global and European economies remains estimated at approximately two years. For the national economy, the duration decreased by 3 months, from 31 to 28 months. The perspective on their own companies and industries remains optimistic. Their recovery is expected to occur in about 1.5 years. Large companies see their own recovery at about 4 months faster than the estimates of medium and small companies. Trade, Construction and Services managers are the most optimistic about the duration of the recovery of the national and European economies.
Methodology and perspectives
Initiated shortly after the onset of the pandemic, CONFIDEX measures the confidence of Romanian managers in the current economy and aims to create benchmarks for businesses and to support managers in making reality-based decisions.
CONFIDEX is the only study that captured T zero of companies and quarterly monitored the pulse of the economy throughout the pandemic. In the four stages of the research so far, over 1,500 managers from Romania responded. The responding companies have over 150,000 employees.
The CONFIDEX Q1 2021 Study covers a sample of 663 companies from the top 7 categories of economic sectors contributing to GDP: agriculture; industry and electricity; constructions; trade; hospitality; transport, logistics; services. Only CEOs and C-level managers responded to the study, and out of the targeted companies, 75% have over EUR 1 million in turnover and 31% over EUR 5 million.
The CONFIDEX index is built from the aggregation of 29 items and measures on a scale from 0 to 100 points the confidence of the Romanian managers and entrepreneurs in the economy.