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EY Barometer: Fiscal, legislative uncertainties affected investment plans of 57 pct of businesses
Last year's fiscal and legislative uncertainties have affected investment plans for 57 percent of Romania-based companies and 47 percent of the respondents said they are not confident or very unconfident in the evolution of the Romanian economy in the next 12 months, Livia Bereanu, coordinator of the EY confidence barometer, said on Thursday.
According to the survey, the percentage of optimistic respondents is significantly down from the previous edition (18 pct in 2019 vs. 31 pct in 2018), illustrating a background of concern fueled by fiscal and legislative uncertainties, the unsustainable nature of consumption-driven economic growth and inflationary pressure, just to list a few factors that can potentially influence the business environment in 2019.
The EY report developed in partnership with Business Mark is based on an online survey of 301 leaders of organizations from various sectors of the Romanian economy, conducted between October 25 and December 10, 2018.
According to the barometer, cost-cutting (27 pct) and productivity gains (26 pct) are the top priorities of Romanian executives, given the conditions of the business environment in the past year. The acquisition of talents complements the top priorities, and is seen as significantly more important by the leaders of foreign-owned companies. Large firms (by the number of employees and turnover) put cost cutting at the forefront, while smaller businesses focus on increasing productivity.
The survey also shows that 98 pct of the respondents point to the need for a country strategy directed towards sustainable growth and the recovery of structural disparities. Romania must continue to fight corruption, improve regulations and the fiscal framework to encourage higher investments on the part of the private sector. Improving the absorption of European funds in order to reduce the country's infrastructure gap is a major factor for increasing productivity. Economists advocate the adoption by the government of a neutral fiscal strategy - otherwise macroeconomic stability is threatened, the document warns. Legislative and economic tensions render the country less attractive for investment.
According to the surveyed businesspeople, the most important elements for the country strategy to be successful are legislative and/or fiscal consistency, as well as the stability that Romania has been lacking for years. Infrastructure and investments are factors that should be prioritized in the country strategy, the survey also suggests.