39% of companies say they base their growth on launching new products and business lines in 2020

„Compared to the edition from the beginning of 2019, the research on the Business outlook in Romania in 2020 shows a revival of business sentiment in Romania. The research results indicate the optimism of the companies regarding the positive evolution of the turnover, the profit and the investments. Also, the respondents say that the year 2020 will be more favorable for business compared to 2019. We can put the positive perception on account of the change of tone in the approach of economic measures, as well as on the assurances regarding fiscal stability”, says Constantin Măgdălina, Emerging Trends and Technologies Exper, co-author of the research.

Forecasts on turnover growth

Compared to the forecasts from the beginning of 2018 and 2019, the growth prospect of the companies is more optimistic in 2020. We see a 2pp (percentage points) increase of the companies that expect higher turnover by 5% -10% and by 9pp of those who forecast a higher turnover by 10% -20% this year. At the level of industries, an increase of the turnover with 10% -20% is expected by 47% of the companies in the energy and utilities industry, 45% of the professional services companies, 36% of the IT companies and 33% of the telecommunications companies.

Forecasts on profits growth

The forecasts regarding profits growth from the beginning of 2020 are in line with the trend regarding the turnover, being more optimistic. Although 25% of companies, compared to 31% in the previous year, expect their profit to increase by 1% -5% this year, we see a significant increase in the range 10% -20% from 14% in 2019 to 25% in 2020. About the same percentage of companies that say their profit will increase by more than 20% in 2020 compared to 2019. Still, we see a slight decrease in the growth range ”over 30%”, from 6% in 2019 to 4% in 2020. At the level of industries, this year, a profit growth of 10% -20% is forecast by 40% of the companies in the agriculture and food industry, 38% of the companies in the pharmaceutical and health industry, 35% of companies in trade, and 21% of companies in media and advertising.

Forecasts on investments growth

If in 2019, 23% of companies said they would not increase investments, in 2020 only 11% said so. We also note that this year 24% of companies want to increase their investments by 5% -10%, compared to 17% in 2019. The percentage of companies in the growth range of 10% -20% remains unchanged at 16% in the last three years. On the other hand, 20% of companies say they will increase investments by 20% -30% and over 30% this year, compared with 11% in 2019 and 15% in 2018. At the industry level, most companies in agriculture and food (40%), information technology (27%) and utilities and energy (17%), say will increase their investments by over 30% this year.

Forecasts on the number of employees

In 2020, 25% of the Romanian companies say they do not expect any increase in the number of employees, compared to 26% in 2019 and 24% in 2018. The major growth levels are 5% -10% and 10% -20%. At this start of the year 19% of companies, compared to 14% in 2019 and 17% in 2018, say that their staff is expected to increase between 5% -10%, and 12% of companies, compared to 10% in 2019 and 8% in 2018, their number of employees is expected to increase between 10% and 20%. At the same time, we note that 23% of the construction and real estate companies, 34% of the information technology, 32% of the agriculture and food, 29% of the telecommunications and 37% of the companies in the pharmaceutical and health industry estimate increases of the number of employees of 5% -10% in 2020.

Forecasts on salaries growth

At the beginning of 2020, 16% of companies do not expect wage increases, the minimum of the last 3 years. On the other hand, the percentage of companies that say they will increase wages by 5% -10% increases from 30% in 2019 and 2018 to 36% in 2020. At the same time, we see an increased percentage of companies which expect wages to grow by 10% -20%, from 12% in 2019 to 16% in 2020. On the other hand, at the level of industries the biggest wage increases of 10% -20% are expected by 25% of the construction and real estate companies, 22% of the companies in the agriculture and food industry and 20% of the industrial production companies.

Top 5 challenges and opportunities

The most important challenges for companies at the beginning of 2020 are the following: attracting and retaining the workforce (68%), increasing costs (57%), increasing competition (54%), difficulty in collecting invoices (48%) and instability of the economic environment and social (35%).

The most important opportunities of 2020 for Romanian companies are the following: launch of new products or business lines (39%), potential for economic growth (36%), access to European funds (33%), digitalization and automation (28%) and the overall improvement of the business environment (23%).

Moreover, the executive directors of the responding companies say that the three main measures that would lead to the improvement of the business environment in Romania are: investments in infrastructure (82%), lower labor taxation (76%) and political and fiscal stability (59%).

 „The responses of the executive directors regarding the growth prospects of the companies they run indicate a positive change of perspective. Compared with the results of the 2019 edition of the survey on the Business outlook in Romania, those of 2020 show higher forecasted increases in turnover and profit. For the moment, there are some positive arguments for the growth of confidence in the evolution of the main business indicators during this year, but these are beginning to erode under the continuous streaming of news regarding the spreading of COV-19. It remains to be seen how much reliable capital will last until the local elections”, says Dumitru Ion, CEO of Kompass Romania și Doingbusiness.ro, co-author of the survey.

(source: Valoria)