AmCham Romania presented the results of the 2020 edition of the Business Barometer Survey. Compared with the previous edition, the responses to questions related to Romania’s competitive advantages, most valued market conditions and estimates for the business performance in 2020 indicate a depreciation of investors’ confidence in the Romanian business climate and moderate expectations regarding the business results.
“2020 is an atypical year for the economy due to the COVID-19 pandemic. Consequently, the results of the survey reflect this new reality, and companies in Romania predict significantly lower results in terms of revenues, number of employees and planned investments than last year. Amid this challenging context that also generated opportunities, AmCham calls for immediate action towards economic recovery and a sound post pandemic business and investment climate. In this context, we welcome the National Plan for Investments and Economic Recovery launched by the Romanian Government that outlines public investments above EUR 100 billion over the next decade. At the same time, Romania must take full advantage of the new opportunities available in the EU financing framework such as Next Generation EU, by taking fast, strategic and visionaty action for the future” declared Ionuț Simion, Președintele AmCham Romania”.
Approximately 50% of the responding companies expect to conclude FY 2020 with lower revenues, number of employees and lower investments compared with FY 2019 when only 10% predicted a decrease for the same indicators.
The quality of the digital infrastructure is ranking highest the top of the most valued market conditions Romania offers, being in fact the only one that was rated very good by 20% of the respondents. The quality of human capital comes next, considered very good by 8% of the respondent and good by 45%. Ranking third, similarly to the 2019 edition, is the corporate tax level.
As for the mix of competitive advantages that continue to remain relevant for Romania in the current context, Romania’s EU membership is valued highest, with 83% of the responses, 5% up from its ranking in the 2019 AmCham Barometer.
Regarding the human capital, the survey indicates concerns in terms of availability of skilled labor force and match of competences with the labor market demand, which are the reasons for which 60% of the respondents characterize the situation of the labor market in their industry as being tensioned.
18% of the survey participants estimate a decrease of the turnover beyond 25%, 24% of them anticipate a decrease between 10 – 25% and 29% predict a 10% decrease of the turnover in 2020.
“I would like to point that companies have expressed a relatively optimistic outlook regarding the economic recovery, with 45% considering most likely a midterm recovery – the U shape and 11% a rapid recovery following the pandemic shock, the V shape scenario. However, this perspective can only become a reality on condition that firm measures will be adopted to restore companies’confidence in the Romanian economy, especially as almost half of the participating companies have no plans for new investments in 2020” said Omer Tetik, AmCham Romania Vice-President.
In terms of financing the business operations, most companies mainly rely on own funds in 2020 and for the near future, while a third of the respondents will complement own funds with other financing sources such as bank loans or shareholder loans.
Concerning the economic recovery, AmCham Romania members consider that the main pillars of this process should be, in the order of cumulated responses, investments in infrastructure (76%), digitalization of the public administration, including tax administration (73%), reform of the healthcare system (53%), increased stability and predictability of the political and legislative framework (49%) and a higher absorption of the EU Financing, especially of the economic recovery funds available for member states (45%).
“The most appreciated Government measures for supporting businesses were in AmCham members’ view related to cash flow and employees, respectively the bonus for advance payments of the tax on profit, accelerated VAT reimbursement and technical unemployment, therefore we welcome the decision to extend the term for these measurer that continue to be relevant on the short and medium term. Concomitantly, investments for modernizing and digitizing the fiscal administration should be launched without delay, in order to follow the accelerated digitalization trend in the private sector and to simplify the voluntary compliance and increase the collection of budgetary revenues, said Alex Milcev, member of the AmCham Romania Board of Directors.
While many companies indicated that they expect a new epidemic wave or that they can’t express a view on this matter, they confirmed that operational changes implemented during the past few months will become business as usual and these include digitalization, accelerated by the pandemic for more than 50% of the respondents, researching for new products, services, markets, or reducing operational costs.
AmCham Romania will continue to promote such recommendations in the dialogue with the Romanian Government and relevant stakeholders in order to contribute to adopting the best public policies and economic measures that will lead to Romania’s sustainable growth, based on high added value.