RSS
German companies in Romania: Present situation is good, but worries for political-economic conditions and juridical stability grow
The present situation of German companies in Romania is good and short term expectations for their evolution are optimistic, but compared to the opinion poll in the fall of 2016, the percentage of those who see a worse situation on an average term has grown (2017: 29% worse, 2-16: 8%), show the results of the present questionnaire made by the Romanian- German Chamber of Commerce and Industry of September 2017. Political-economic frame conditions are considered by far the highest risk for economy. Over 69% of companies which participated in the poll are dissatisfied by this aspect, which is a significant worsening compared to the 2016 poll.
Main conclusions of the questionnaire:
- The present situation of companies is good and expectations about their evolution are optimistic. The September 2017 poll shows that German companies are more confident about their present situation than in the spring. 60% of companies (in spring:55%) consider their situation is good, 34% (41% in spring) consider the situation is not changed, while the rest of 6% of companies that answered the questionnaire consider the situation of the company is bad (4% in spring).
- As for expectations, companies are less confident in the fall than in spring. However, about half of people interviewed consider their businesses will evolve positively in the next 12 months (spring: 53%). 43% consider the situation of the company will remain unchanged (39% in spring), fewer consider a worsening of the situation: 8% both in spring and fall.
The positive atmosphere is based on the good situation both in Romania and Germany, Romania’s most important economic partner. In the autumn poll there are more companies estimating an improvement of the average term conjuncture (28%) against the spring (22%). 42% of companies do not expect changes (spring: 45%), while the rest of 29% consider the evolution will get worse (spring: 33%).
Compared to the poll of autumn 2016, the percentage of those who see a worsening of the average term situation grew (2017: 29% worse, 2016: 8%).
Optimism is maintained on a short term, which probably concerns political economic evolutions in the last months.
Situation in labour market and investments:
More than half of companies wish to hire people, but are faced with the lack of trained personnel. Especially in areas like Timis, Arad, Sibiu, Cluj, Brasov, manufacturing companies have problems in finding labour force. The lack of labour force and trained staff will have negative effects on the future evolution of the country, while factors like demography and migration support this negative effect. The present situation of orders, which depends on the conjunctural situation especially for German companies, leads to the limit of production capacities. According to the autumn questionnaire, the number of employees will grow(51% in autumn, 54% in spring) in the next 12 months, 43% consider the number will be the same (spring: 36%). Only 6% of participating companies in autumn consider the number of employees will drop (spring: 10%).
- Intention to make investments in the next 12 months: 31% of people who answered the questionnaire consider investments will remain at the same level (spring 42%) while 40% of companies see growing investments (spring:37%). 19% consider investments will drop (spring-21%), while 9% say there will not be any investments in the following year.
Risk factors for economic development
The highest risk is by far political- economic development, according to questionnaire of autumn 2017: 69% of participating companies are dissatisfied by this aspect. This is a significant worsening compared to last year’s questionnaire, when only 36% saw a risk factor in political economic conditions. Romania registers the highest economic growth in EU (+7% in first 9 months), but this increase is based mainly on consumption. To that we can add the increase of current account deficit which grew by 87% compared to 2016, from 2.8 billion euros (in the first 10 moths of 2016), to 5.3 billion euros (2017).
For every second company of those interviewed, infrastructure, costs with labour force and juridical stability represent other risk factors which could affect investments plans of German companies. Compared to the questionnaire of autumn 2016 the number of people worried by juridical stability grew (2016: 32.4%, 2017: 48.1%).
The field of infrastructure was negatively appreciated by German companies present in Romania in the spring questionnaire too. Romania remains one of the main places in Central and Eastern Europe. As for road infrastructure, it urgently needs expansion and modernization. In the autumn 2017 questionnaire, over 53% of companies see in it a risk factor for Romania’s economic development, considerably more than in autumn 2016 (30%).