Impetum Group: Romanian managers’ confidence in the economy is declining and they are estimating a return to recession

Managers’ confidence in the Romanian economy has declined to the level of the beginning of the pandemic, and the economic outlook for the coming months has worsened: 41 percent of managers believe that GDP will decline (compared to 17 percent in Q1 2021). The main concerns for the next period are defined by the lack of labour force, the increase in the price of raw materials and the increase in inflation, according to the Confidex results published by Impetum Group.

“The decrease of the Confidex index to a level similar to the one from the beginning of the pandemic comes against the background of the accentuation of some long-term effects of the Covid-19 crisis, such as the disturbances in the supply chains that directly affect the industrial production. There are also some short-term effects, generated by the political crisis and the IV wave that destabilize the employment outlook. CONFIDEX S2 2021 shows us not only that managers have lost much of their confidence in the economy, but also a possible re-entry into recession, indicated by a very high percentage, 41 percent of managers. Basically, we understand that two crises overlap – the health crisis and the prospect of a possible new economic crisis, in which the economy is hit by rising energy prices, rising prices and other direct effects of the health crisis. And the recovery from these crises is estimated in a horizon of at least two years, but even three and a half years for the Romanian economy as a whole,” said Andrei Cionca, CEO & Co-founder of Impetum Group.

Compared to the Confidex Study conducted at the beginning of 2021, Impetum Group observes an involution of the managers’ mood and a strengthening of negative perceptions: the share of those who believe that GDP will decrease has doubled (41 percent vs 17 percent in Q1 2021), increased the share of those who believe that the power of the leu will decrease (86 percent vs 77 percent in Q1 2021) and increased the share of those who believe that inflation will increase (92 percent vs 74 percent in Q1 2021). Managers from HORECA and Transport or those from companies with a low turnover are the most pessimistic. On the other hand, managers in Services or those of large companies are the most optimistic. The level of optimism is also reduced in the predictions for the next 12 months. Only one in 8 managers believes that the national economy will improve. Instead, one in 5 managers estimates that the global and European economies will have a positive trend in the next year.

“The 3 main concerns of entrepreneurs and managers, according to the CONFIDEX study, are the lack of labour, the increase in the price of raw materials and the inflation rate. These were also the main issues raised by the President of the European Central Bank – Christine Lagarde, in a speech to the European Parliament, which sees the 3 issues as the cause for the slowdown and worsening prospects in the near future. Concerns also come as the euro area inflation rate is at its highest level in 13 years. Returning to our country, managers note for the first time after the onset of the pandemic, when many Romanians returned home, a labour crisis. It appears for the first time in the list of concerns and the political context,” also mentioned Andrei Cionca, CEO & Co-founder of Impetum Group.

The mood indicator on the evolution of the national economy, started from 4.4 in Q2 2020, stagnated in Q3 2020, followed by an increase to 5 in Q1 2021, and now returns to 4.4. Compared to previous editions of Confidex studies, the mood of managers in most fields is worsening. Agriculture managers returned in first place as optimism, followed by Services, Industry and Construction, and those in HORECA and transport are still at the lowest average since the beginning of the pandemic and the Confidex study.

“The confidence of managers and entrepreneurs in the economy has indeed decreased considerably. However, the other side of the coin is the opportunities that can arise in an economic crisis given the current dysfunctions of the market, opportunities that can be about market consolidation, developing new partnerships through which companies can reduce risks as much as possible and supplement staff resources. with efficient management, able to manage crisis situations,” concluded Andrei Cionca.