. It will be hard to find another event with such a powerful impact on the lives of people and companies. Businesses in 51 of the 85 sectors of Romania’s economy saw decline in the first half, but managers are also talking about opportunities, about speeding up processes. What should we take from 2020? ZF identified 15 events that marked the business year that is about to end.
* COVID-19 pandemic
The year 2020 was marked by the COVID-19 pandemic, by the unprecedented healthcare crisis, by turmoil for the economy, managers, entrepreneurs, companies and employees. A difficult year, full of uncertainty, with rapid changes and decisions that not only influence the jobs but also the lives of tens of thousands of employees, this is what 2020 looked like for the leaders in the Romanian business sector. Entrepreneurs, managers, consultants, lawyers, they were all faced with a year when they had to make quick decisions, whose consequences will affect not only one year but many more from now.
* Key rate of Romania’s central bank dropped to an all-time low of 1.5%
Romania’s central bank cut the key rate three times in 2020 to alleviate financial turmoil caused by the coronavirus. The first adjustment came in March, from 2.5% to 2% a year. The rate went down further by 0.25% to 1.75% at the end of May and then reached the all-time low of 1.5% a year in August. It has remained at that level ever since.
* First EUR1 billion deal in the past 12 years
At the end of October, after almost one and a half years of talks, Czech Republic’s energy group CEZ, announced it had sold its local operations to alternative asst manager MIRA, which manages about $129 billion in assets worldwide, almost half of Romania’s GDP.
The deal put at more than EUR1 billion is the fourth highest deal in the history of the local M&A market.
* Stable exchange rate at less than 5 lei/euro
Romania’s domestic currency fluctuated in 2020, especially when COVID-19 became a pandemic. The leu first lost ground to the euro behind the RON4.8/EUR threshold on February 2020, and depreciation pressures continued in March. At the end of November, the domestic current reached RON4.8735/EUR, 2% higher than at the end of 2019. However, the leu/euro exchange rate was less volatile compared with other currencies in the region.
* Promotion of Romanian stock market
The Romanian stock market was officially promoted from frontier to emerging market status in the fall of 2020, after meeting the criteria of FTSE Russell. The local stock market will therefore draw the attention of some major investors, which manage tens of billions of euros in assets.
* Offices won’t go away, record deal between AFI Europe and NEPI
At the height of the COVID-19 pandemic, Israel’s AFI Europe resumed talks with NEPI Rockcastle and completed the deal announced at the end of 2019, whereby the latter sold its office space portfolio. Such a deal worth more than EUR300 million closed at this time, means that even though the labor market is radically changing due to the pandemic, offices will not go away, they will merely be reconfigured for the new context.
* Hospitality industry’s fight for survival
The hospitality industry was among the first affected by the pandemic, something that left hotels, restaurants and bars in Romania without half of their revenue. Although totally or partly closed, the actors in the sector found ways to keep going, most of them betting on deliveries, on heated patios or selling their products in retail stores.
* eMAG, spearhead of Romanian online commerce
In a year of limited freedom of movement, when people had to rethink how they shop, online commerce became the main bet of retailers, regardless of the type. This sales channel drew the attention of both companies and shoppers, so the shopping for food, clothing, cosmetics or home appliances, was done mostly over the Internet.
* Wirecard and change of Pillar II legislation in Romania
The seven private pension funds part of the Pillar II in Romania will have to do reporting of their detailed investment structure more often. Following the collapse of electronic payment processor Wirecard, in which the largest mandatory private pension fund part of the Pillar II in Romania held stock, the country’s Financial Supervisory Authority (ASF) decided to improve transparency of Pillar II funds.
* Remote work, key word of pandemic
The pandemic forced employers to make some changes so almost one quarter of the employees in Romania ended up working from home in the first half of 2020. Moreover, companies say they plan to extend remote work after the pandemic, so the new normal could mean working out of one’s kitchen or living room.
* Drought caused 40% drop in grain production
Romania could see an up to 18 million ton grain production this year, according to European Commission data, lower than the 2015 harvest when the severe drought in April-September led to a 19.5 million ton production. In the past decade, only 2012, another year of severe drought, saw lower production than in the year of COVID-19, merely 12.8 million tons.
* Bucharest Stock Exchange becomes source of funding for entrepreneurs
In 2020, Agroserv Mariuta, the owner of the Laptaria cu Caimac brand, turned to the Bucharest Stock Exchange with a 14.6 million lei (EUR3 million) bond issue, to secure funding for investments. Holde Agri Invest, which owns almost 10,000 hectares of land and has already made about EUR10 million investments in its first three years in business, is on the Bucharest Stock Exchange. Another business to turn to the stock market is Norofert Group, the main Romanian organic fertilizer producer. Entrepreneur Horia Cardos, owner of Agroland, the largest agricultural supply store chain in Romania, said he planned to raise some RON8 milion from Bucharest Stock Exchange investors soon.
* Grants and support schemes for businesses and people
2020 came with a loan moratorium for the first time, due to the coronavirus crisis. Governmental schemes to encourage borrowing such as IMM Invest (SME Invest) or Noua Casa (New Home) were introduced, as well. Next were EUR2,000 grants for microenterprises and schemes offering higher amounts of money for SMEs, which, however, were unable to cover all the sectors hurt by this year’s crisis.
* No more vacations
Last minute was the key concept of vacations in 2020, a year when changes and restrictions came overnight, depending on the pandemic progress. Travel agencies say decline in vacation bookings is as bad as 80% of last year’s level. Travel agency and airline market is one of the three worst hit sectors of the economy in 2020.
* Parliamentary and local elections
The year 2020 saw several rounds of elections, with Romanians choosing the parliamentary representatives. A new government, with Florin Citu as prime minister takes office at a time of uncertainty, with lots of doubts about economic indicators and especially healthcare resources.
(English version by Loredana Fratila-Cristescu)