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Study: A vision of growth, EY Romania

Business people remain confident in the evolution of the Romanian economy in the next 12 months, but are concerned about the increase in consumption

89% of the business people in Romania are confident that their business will grow this year, while only seven percent expect a decrease of their turnover and four percent expect stagnation. Out of those who expect an increase, 41% estimate a significantly positive evolution (growth larger than ten percent).

The expectations regarding the profit evolution are also positive – 81% of companies expect an increase in profitability for the current year. Almost one of three companies expect more than ten percent growth of this indicator, while 48 percent estimate growth rates lower than this level.

The positive trend in sales will be supported by increasing investments, as 64% of companies plan increasing investments with 5 to 30 percent by the end of the year. In terms of financing, companies relay especially on their own resources, on profit reinvesting and on loans from organizations affiliated to the same group of companies. These are followed by bank loans, according to EY Romania study "A new vision of growth".

The EY study is based on answers received from 267 top executives and analyses their perception related to the evolution of the business climate in Romania in 2016 and 2017. 13% of the respondents manage companies with a turnover bigger than EUR 50 million, 27% lead companies with turnover between EUR 10 and 50 million, 41 percent with turnover between EUR 1 and 10 million, and 19 percent with turnovers under EUR 1 million. The survey was carried out between September 1 and September 16, 2016.

"Romania goes through a good economic period. According to the IMF prognosis, Romania will have the highest economic growth in Europe this year. However, the results of this EY study edition shows the concern of the Romanian executives related to the growth model of the Romanian economy, strongly based on increasing consumption. 98% of them indicate the need of a country strategy that will ensure Romania a sustainable growth and recovering structural delays when compared to Western countries," said Bogdan Ion, Country Managing Partner, EY Romania.

Business people are confident in the Romanian economy evolution for the next 12 months

57% of the responding business people are confident in the Romanian economy evolution for the next 12 months. Their optimism comes as a result of a strong growth of the Romanian economy during the first half of 2016. The economic growth published by the National Statistics Institute (INS) for the first semester of the year went to 5.2 percent, mainly driven up by the domestic demand.

Concern related to consumption growth

More than half of the top executives say they are concerned about Romania's economic growth model based on stimulating consumption. Latest INS data show the economic progress was strongly stimulated by increasing consumption during the first half of 2016 (7.2 %) compared to investments, which only contributed with 1.6 %, while net exports registered a – 2.8% negative contribution, due to the demand in excess that could not be satisfied by domestic offer.

Taking such a concern into consideration, 98% of the business people indicate the need of a country strategy that may ensure Romania a sustainable growth model.

Wages and the number of employees – on the rise

Positive trends related to turnovers and the demand for goods and services also reflect positively in terms of wages and number of employees. While 33% of the employers expect rather small growth rates (under five percent) of the number of employees, 34 percent of them say they will increase the number of employees with percentages between 5 and 30 percent.

82 percent of companies intend to raise wages, but 48 % of the respondents do not estimate a growth larger than five percent. 34 percent of the respondents will increase wages with rates between 5 and 20 percent, compared to 43 percent of them that were planning this at the beginning of this year. Such percentages reflect intentions and do not measure effective increases on the market.

 

Contact:Adrian Georgescu

Company:EY România

Phone:+40 21 402 4000

E-mail:adrian.georgescu@ro.ey.com

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