The companies in Romania expect improvements in macroeconomic indicators, such as gross domestic product (GDP), inflation, and unemployment, but they seem to maintain a cautious approach due to the high level of uncertainty, according to the DeloitteCFO SurveyRomania 2024 study, conducted at the end of last year among over 110 chief financial officers (CFOs) in our country.

Estimates regarding economic growth have slightly improved compared to last year, with Romania's CFOs expecting an average GDP growth of 1.5% this year, exceeding the 1.2% level from the previous year, but still below the forecasts of international institutions such as the European Commission and the World Bank.

However, respondents are more optimistic than their counterparts in Central Europe, who expect an average economic growth of 1.1% in 2024.

The majority of financial directors in Romania participating in the study (60%) expect the consumer price index to continue its growth this year, but their inflation forecasts have significantly moderated compared to the previous year, from 11.2% to 6.75%, although they remain higher than the most recent forecasts of the National Bank of Romania.

Most respondents in Romania believe that cost increases will continue to be a pressure factor for companies in 2024, especially labor costs (99%), production and distribution costs (86%), transportation (78%), and services (73%). A significant change from last year is that 70% of CFOs now expect an increase in costs associated with corporate tax, compared to 22% in 2023, and half of them also expect an increase in costs associated with VAT, compared to 27% last year.

On the other hand, a significantly smaller number of respondents expect financing costs to increase this year (55%, compared to 88% in 2023). Internal sources of funding remain preferred by 55% of study participants, while bank loans are considered attractive by only 21% of respondents.

Regarding unemployment, companies in Romania are also quite optimistic, with almost half (46%) of the study participants believing that this indicator will remain stable in 2024, up from 33% last year.

"More than half of the financial directors in Romania feel a high degree of uncertainty generated by external factors affecting the company, so they are still rather cautious, with 84% of study participants considering that it is not a good time to take additional risks that could affect their balance sheets.

Although two-thirds of them are optimistic about revenue growth, their responses indicate a preference for consolidating the cost management area to maintain companies in good financial shape," said Zeno Căprariu, Audit Partner, Deloitte Romania, coordinator of the CFO Program in Romania.

Intensification of the regulatory framework is the greatest risk for companies in Romania, according to 64% of participating CFOs, double the proportion from last year and significantly higher than the European average of 38%. Other risk factors include the lack of employees with necessary skills (46%, significantly down from 63% last year), reduction in internal demand (42%) and external demand (34%), as well as geopolitical risks (31%).

In a context where these risk factors create an environment characterized by a high degree of uncertainty, cost reduction is a priority for one-third of companies this year (37%). Other strategic areas of interest for financial directors in Romania include organic growth (21%), digitalization (9%), and expansion into existing markets (8%).

The Deloitte CFO Survey Romania 2024 study was conducted between October and December 2023. Local responses are compared with aggregated data collected from approximately 550 chief financial officers in 15 Central European countries - Albania, Bosnia and Herzegovina, Bulgaria, Czech Republic, Croatia, Estonia, Kosovo, Latvia, Lithuania, Poland, Romania, Serbia, Slovakia, Slovenia, and Hungary. (Photo: Freepik)