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August 17, 2022

One year of CONFIDEX by Impetum Group: How the first pandemic year affected Romanian managers

Initiated shortly after the beginning of the pandemic, and aimed at providing a real image of the economy in its present state, CONFIDEX by Impetum Group has been measuring the Romanian managers’ trust in the economy for the past year.

During the four editions of CONFIDEX, over 1,500 managers from companies with a total of over 150,000 employees joined Impetum Group in its mission to generate a positive impact on the economy. CONFIDEX results were discussed with over 40 CEOs and contractors, but also with public personalities. All in all, the CONFIDEX research covered over 4.5 million people through all communication channels. Also in this year, CONFIDEX has become the voice of the business environment, for which it has created valid landmarks aimed at taking rigorously adapted decisions.

Impetum Group (made up by gathering under the same umbrella of CITR, the leader of the insolvency market in Romania and the 2 investment solutions ROCA and ROCA X,  has made a retrospective analysis of the way in which companies and the entire national economy has reacted to the economic challenges triggered by COVID-19, and the main findings are:


Continuous evolution of the Romanian economy


CONFIDEX data shows that, after the initial shock of the pandemic, our economy has grown steadily, without turbulence. “The analysis of the main economic indicators of companies shows us a continuous evolution. All these clues show that the solutions are the result of the synergies created between government policies, the banking sector and especially the mindset of entrepreneurs. The shock generated by the pandemic has been successfully managed, and all these efforts have led to an increased confidence, so necessary for getting through this crisis” said Andrei Cionca, CEO of Impetum Group.

If, at the beginning of the pandemic, the decrease of turnover was estimated at 20% of the predictions made at the beginning of 2020, this value decreased constantly throughout 2020 (reaching 10% at the end of 2020), while in 2021 it was of 7%. The profit decrease was also estimated starting from -22% in April 2020 and was reviewed at -11% in April 2021.

If, in what the employee retention is concerned, figures did not undergo a significant variation (-3% to -5%), in the case of investments the -15% decrease at the beginning of the pandemic was compensated by an increase, especially in the second half of 2020 (-6%), while the decrease in the first term of 2021 was of only -1%. Of course, most likely, the rebalancing of investment budgets at the beginning of 2021 contributed to this result.


K-shaped recovery

A full recovery to the pre-pandemic level is one of the main aims for most managers. The relevant figures of the four terms under focus show the perception of an asymptotic V-type recovery model with several speeds, levelling up as the economy keeps getting closer to the target.

„The K-shaped recovery has been very evident at the sectoral level: construction and services have performed well in the pandemic, while others such as HoReCa and transport have been severely affected. It should be noted that this K-shaped recovery is also manifested within each sector of the economy. Managers who find the key to reinventing their business through investments, digitalization, rethinking strategies and products, recover faster from pandemic losses, while managers who do not adapt their businesses to market needs recover later, ” added Andrei Cionca.

However, the managers’ strategic option for productivity increase marked a major boost, as compared to those who prefer costs reduction. The figures regarding their approach to investments are also correlated to a preference for higher productivity.

Enhancing privatization, implementing innovative measures and revising company strategies are the main development directions adopted by companies. These are the result of the lessons learned after this crisis, whereby those who managed to adapt first and chose alternative means for continuing their activity avoided major fluctuations and managed to survive.


There is a need for consolidating medium-sized players


“Small companies have been more affected by the crisis, according to CONFIDEX data, and this signal can indicate that support should also depend on turnover, not just on the sector. Another shortcoming that this crisis has shown in our economy is that, between a few large companies and many small ones, we do not have medium-sized players to help us overcome crises easier. ” Andrei Cionca concluded.

The main challenges felt by managers can be divided into two major categories. The first one was marked by a dire decrease of sales, the lack of cashflow and of predictability, whereby the figures were almost constant throughout this year. More than a third of the managers felt the crisis in their retain figures, while the cashflow and predictability underwent a slightly bigger variation, from 22% in April 2020 to 12% in April 2021. The second category was marked by the staff crisis, with an increase of the indices from 24% in April 2020 to 34% in 2021. As for the manufacturing costs, the percentage rose from 7% in the first term to 25% in 2021.

If, in the first six months of 2020, 40% of all managers stated that their companies had been affected by the crisis, the percentage decreased in the second half of 2020, to 35% and then rose again up to 48% in 2021. In the same trend, although managers predict an improvement of the GDP and decrease on unemployment, the predictions for 2021 see a higher inflation, with prices rising for certain raw materials.


The CONFIDEX index measures the managers’ trust in the economy


The CONFIDEX index has evolved over the last 4 quarters, from a value of 40 at the beginning of the pandemic, to a value of 47 after 1 year. This development shows an increasing optimism, but a fluctuating one, marked not only by the pandemic crisis itself, but also by other factors influencing the economy. From the transportation crisis to the plastic crisis, the global economy is affected by the post-pandemic shock waves resulting both from predicted causes and from unpredictable factors. As a result, the CONFIDEX index will provide different development rates in the future, being dependent on other factors than those generated by the health crisis itself.


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