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News from Members The Positive Expectations for 2014 of Romanian Businessmen Suffer Corrections

The Positive Expectations for 2014 of Romanian Businessmen Suffer Corrections

by EY September 23, 2014

Website www.ey.com

If at the beginning of the year, Romanian business leaders have had mainly positive expectations regarding increasing their business in 2014, mostly set in a prudent area in the segments of 1-5% and 5-10%, as we approach year end, expectations are shaping differently and extremes begin to show up: either bigger increases for businesses that exploited market opportunities, either decreases.

According to the study A vision for growth, published by EY Romania today, 12% of respondents were expecting a decline in revenues, compared to only 2% in the previous edition of the survey, conducted earlier in 2014.
Meanwhile, the 5.1% growth area lost 19 percentage points, which in this edition of the survey were redistributed especially among the negative expectations.

The EY study is based on responses from 305 top executives analyzing their perception on business outlook in Romania in 2014. The responses were collected between 28 July - 8 August 2014. Most of the respondents (51%) come from companies with a turnover of more than 50 million and 54% of them are CEOs/Presidents of the company.

Business leaders who answered the EY survey expect, to a greater extent than at the beginning of the year, the number of employees in their company to increase in 2014. Once identifying the direction of the market in which they activate in and the trends in demand, the number of those expecting a stagnation in labor force decreased by 15 percentage points, from 37% to 22%, that were distributed mostly in the growth area, to levels of 1-5% and 5-10%. At the positive extreme, 2% of employers expect an increase of over 30% of the labor force in their own company.

Under the pressure of the EU labor market liberalization, as well as due to other factors, salary growth has moved from the 1-5% area to areas with higher growth. Thus, if at the beginning of the year, 60% of respondents believed that salary would reach growth rates of 1-5% in 2014, this edition shows those having this expectation dropped to 51%. The 9 percentage points were distributed as follows: 4 points in the 5-10% area (reaching 23% expectations of growth by 5-10% in salary level), also 4 points in the 10-20% area (6%) and 1 point increase in the salary growth area of over 20% (1%).

Outlook over the industry in which companies activate

  • Reducing costs comes back into focus in what is perceived to be a competitive advantage in responses of the surveyed business leaders: 38% believe that this is the main strength of the other players.
  • Contrary to salary growth expectations, emphasis on reducing costs cannot however be sustainable, while research and development are indicated by only 6% of respondents as a competitive advantage in the market.
  • At the same time, the outlook in the next 6 months over the industry companies activate in starts to also receive negative shades, with 8 percentage points from the answers that at the beginning of the year perceived the industry's prospects to be very good, now transferring to the negative responses.
  • 9% of respondents expect the demand to decline in the next six months. As a response to this trend, the highest growth can be seen in the boost of marketing and sales activity (up 9 percentage points, to 33%) and lowering prices (14% of respondents foresee this measure to increase sales).

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About the study "A vision for growth"

EY Romania’s study on the perception of the Romanian business environment in 2014 is based on a survey examining the perceptions of 305 top executives from local organizations in various industries. Most respondents (51%) come from companies with turnover exceeding EUR 50mn. They answered EY Romania’s survey between 28 July – 8 August 2014.
About EY Romania

EY is one of the world's leading professional services firms with approximately 167,000 employees in 700 offices across 140 countries, and revenues of approximately $24.4 billion in 2012. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, EY has been a leader on the professional services market since its set up in 1992. Our over 450 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. From 1 July 2013, Ernst & Young becomes EY, the logo has been modified in response to this change and the company's new tagline becomes "Building a better working world". The new visual identity reflects the new strategy of EY, Vision 2020. For more information, please visit www.ey.com.

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