At the same time, just 7% of executives expect a decline in turnover, while 4% predict stagnation for their businesses.
“Romania is going through a good economic period. The IMF forecasts Romania will register the biggest economic growth in Europe this year. However, the survey shows Romanian top executives are concerned about the fundamentals of this growth, which relies heavily on consumption. Thus, 98% of executives indicate the need for a country strategy that would ensure sustainable growth for Romania and narrow structural lags compared with western economies,” said Bogdan Ion, country managing Partner with EY Romania.
Expectations regarding profits are also on the positive side, as 81% of businesses expect their profits to rise this year. Nearly one in three companies expects its profit to grow by more than 10%, while 48% estimate single digit growth in profit.
Executives plan to raise their turnover by raining investments and 64% of companies plan to raise investments by 5%-30% by the end of the year. In terms of preferred financing, companies mainly choose self-funding, reinvestment of profits, followed by loans from sister companies and bank loans.
On the other hand, more than half of the top executives surveyed expressed concern that Romania’s economic growth relies heavily on consumption. The statistics board has shown the country’s economic growth in the first half of the year was driven by a 7.2% spike in consumption, while investments contributed just 1.6% and net exports stood had a negative contribution to the gross domestic product, of -2.8%.
The survey was conducted in the period September 1-16, 2016 and polled 267 top executives in Romania regarding their outlook on the local business environment in 2016 and 2017.