Romania’s economy is growing, investors’ confidence is deteriorating, says FIC

The results of the September 2017 survey of the Foreign Investors Council (FIC) tell that more than 60 percent of respondents expect their revenues and business to grow in the next year, considering the economic growth of this year and the forecasts for next year. At the same time, FIC’ members believe that the business environment in Romania is deteriorating considerably, especially on the predictability of the legislative framework, and the stability of fiscal and regulatory frameworks.

FIC publishes twice a year the results of the business sentiment index survey conducted among its members. FIC member companies represent a significant share of foreign direct investment in Romania. They have more than 180,000 employees and a total turnover that is approximately 25 percent of GDP.

Thus, 90 percent of respondents, a significant increase from only 25 percent in 2015, say the constant changing legislation is affecting their business planning, 65 percent say that the fiscal burden has increased, up from 35 percent in 2015, while 75 percent report that the business environment in Romania has worsened recently and that current developments have lowered their trust.

On another topic, the number of FIC members reporting that infrastructure, bureaucracy or availability of workforce are an increasing problem has been constantly growing in the past two years. At the same time, 42 percent companies report that Romania is losing its competitiveness in term of labour force, up from only 6 percent in 2015. This is one of the most severe deteriorating indices.

Moreover, 90 percent of respondents say that infrastructure and bureaucracy have a negative impact on their competitiveness, which is truly worrying.

According to NBR figures, the FDI flow in the first eight months of 2017 was EUR 2.5 billion, with EUR 600 million less than the same period last year.

However, FIC says that to talk about this difference as a result of a diminishing trust of foreign investors in Romania would be premature, because an investment decision is usually made after two years.

Fic concludes that Romania has an opportunity to build on the current economic growth and become one of the top 10 economies in the EU in the next 20 years, but it has to do so wisely ensuring the sustainability of long-term investments and reforms.