Business Forum • 29 November, 2024 at 12:53 PM
The budget deficit, fiscal consolidation, and currency trends are top concerns for Romania's business leaders, according to the 11th edition of the CONFIDEX study, which gauges managerial confidence in the economy. Participants in the associated debate emphasized that mobilizing greater capital for Romanian companies could enhance their competitiveness, positively impacting the broader economy.
Supported by private equity funds ROCA, Agista, and CITR, Romania's leading restructuring and insolvency company, CONFIDEX S2 2024 reveals the critical role private investments play in business growth: 34% of managers highlight the need for financial backing, while 29% foresee investment interest in their companies over the next three years.
"Injecting capital into the real economy is crucial. We must find swift ways to channel investments into Romanian companies so they can grow and become significant players in international markets. This would attract retail investors via the Bucharest Stock Exchange and institutional investors like pension funds. Our analyses show that Romania's ratio of private investments to GDP is approximately 12 times lower than in Western Europe and twice as low as in Central and Eastern Europe. This gap must be bridged to ensure long-term economic growth," stated Andrei Cionca, co-founder of ROCA and Agista and initiator of the CONFIDEX study.
The growing budget deficit may drive further fiscal adjustments in 2025. These measures, anticipated after the electoral cycle concludes, must be carefully managed to minimize their impact on the economy.
"At this time, our greatest economic challenge is the unsustainable fiscal and budgetary situation. Key questions are: what will new fiscal measures look like, and how will they affect the economy? In 2024, Romania's GDP grew by just 0.8% in the first nine months compared to the same period in the previous year despite a massive budget deficit. What will happen when measures to reduce this deficit take effect? We can expect fiscal stimulus to taper off," commented Ionuț Dumitru, Chief Economist at Raiffeisen Bank.
The 11th CONFIDEX study also highlights the resilience of the services and IT sectors, which maintain an optimistic outlook: 38% of managers in services and 35% in IT are positive about the next six months, citing their adaptability to economic changes.
"Healthcare is the most resilient to macroeconomic fluctuations in the services sector. The market has grown consistently, expanding by 9%-10% in 2023 compared to the previous year. We expect a similar growth rate for 2024," noted Fady Chreih, CEO of Regina Maria.
In contrast, managers in construction and industry express caution, with 37% and 39% of respondents in these sectors expressing concerns about economic conditions. The slowdown in the European economy, driven by challenges in the automotive and real estate industries, has amplified these apprehensions.
"We have a dependency on the economies of France and Germany. Through a proper understanding of these dynamics, I am confident that we will identify ways to reposition ourselves strategically, set clear directions for action, and implement a coherent program for economic reconstruction or adjustments to investment and development measures. In the current context, reducing the budget deficit is an essential step toward increasing the attractiveness of our economy to foreign investors," stated Sorin Preda, Founder and CEO of Global Vision.
Despite these challenges, the CONFIDEX Confidence Index remains stable at 52, reflecting consistent managerial sentiment compared to the first half of 2024. Data for this edition were collected in October, before key political developments such as the U.S. presidential election results and Romania's first-round election outcomes.
Looking to 2025, 29% of respondents expressed confidence in the economy, while 37% were cautious, and 34% voiced concerns.