The optimism of CEOs in Romania regarding global economic recovery has reached its highest level in ten years, with 60% of respondents considering that the economic situation will improve in the next 12 months, according to the CEO Survey 2021 report produced by PwC Romania.
Although they are more optimistic than in previous years, CEOs in Romania prove to be more cautious in their forecasts than their global (76%) and Central and Eastern European (CEE) (64%) counterparts.
“The confidence of executives in economic growth prospects is at a record high for the last decade. Three times as many are optimistic as in the 2020 edition. The latest forecasts regarding Romania’s economic development, including the IMF anticipating 7% GDP growth in 2021, confirm the perceptions of business leaders. However, anxiety about the pandemic hasn’t disappeared yet and remains at the top of the growth threats to economies and companies globally and in our country. The results of our study also show that CEOs in Romania want to send a clear message to the authorities that they are still very concerned about the evolution of the pandemic, the volatility of public policies, the risk of a growing tax burden and excessive regulation”, said Ionuț Simion, Country Managing Partner, PwC Romania.
Among the top five threats to economic growth, chief executives in Romania mention pandemics and another health crises (67%), tax policy uncertainty (57%), increasing tax burdens (51%), policy uncertainty (50%) and over-regulation (46%).
Globally, executives’ main concerns are pandemics (52%), cyberthreats (47%), over-regulation (42%), public policy uncertainty (38%) and uncertain economic growth (35%).
The pandemic (58%) and over-regulation (39%) are also among the top threats mentioned by companies in our region, with geopolitical uncertainty (39%), the availability of key skills (38%) and exchange rate volatility (38%) joining them in the top five.
Regarding tax policy, more than half (53%) of the chief executives agree that changes to address rising government debt levels will increase their organisations’ total tax burdens. At the same time, 77% believe that tax policy changes to address rising government debt levels will lead their organisations to reconsider their cost structures, with 66% believing that will have an impact on planning and decision-making in their organisations.
Prudent plans for growth
Regarding the development of their own companies, CEOs in Romania are again more cautious with their forecasts than their global and regional counterparts. Thus, 63% of the respondents in Romania expect their organisation’s revenue growth to improve over the next 12 months, compared with 74% both globally and in CEE. A little over half (52%) of the chief executives in Romania believe profitability will improve over the next 12 months. That is close to the regional figure (53%), but somewhat lower than the global one (65%).
Faced with the new realities and given the uncertainty around the pace of recovery, organisations are still looking inward and mainly relying on their own resources to drive revenue growth over the next 12 months. Thus, around three quarters of CEOs are focused on operational efficiencies.
A mere 17% of the business leaders in Romania are considering new M&As to drive growth, compared with 38% globally, while 3% are planning to sell a business (compared to 13% globally).
CEOs’ growing concerns about cyberthreats and misinformation are translating into digital acceleration in a growing number of organisations. In this context, about half of the general managers in Romania are planning double-digit increases in investments in digital transformation.
The workforce remains a priority for CEOs
Despite the pandemic-triggered crisis, around two out of every five CEOs say that they have managed to keep the headcount relatively the same during the last 12 months.
Thus, almost one in three (30%) of the CEOs in Romania say that their organisational headcounts increased during the last 12 months. That is higher than the global (24%) and regional (25%) shares. At the other end of the spectrum, a similar number (31%) of business leaders in Romania report that their headcounts decreased during the last 12 months. Globally, 38% of the respondents say that they had to let some of their employees go.
While admitting that it is a growing challenge to find talented employees, and despite predictions that technology will radically transform some jobs, CEOs remain generally optimistic about increasing the number of employees in their organisations in the next 12 months. Furthermore, 41% of CEOs in Romania are focusing on organisational productivity through automation and technology to make the greatest impact on their competitiveness.
It should be noted, however, that the share of business leaders who estimate a numerical increase in their own teams is generally lower than in previous years. Of the CEOs in Romania, 46% believe that their headcount will grow over the next 12 months. That is slightly higher than the global and regional figures, but it is lower than in the period 2018–2020 (53%). When considering a three-year time frame, optimism levels about headcount increases are higher, with eight out every ten of the CEOs in Romania anticipating a higher headcount.
A positive “legacy” of the pandemic may be executives’ deeper awareness of the need to focus on workforce health and well-being. Almost one third of the CEOs in CEE and Romania are planning to improve the competitiveness of their businesses by ensuring flexible work arrangements and a good work-life balance for their people.
Top three priorities the governments should have, in CEOs’ opinions
- An effective tax system: 71%.
- Adequate physical and digital infrastructure: 68%.
- A skilled, educated and adaptable workforce: 61%.
Conducted in January and February 2021, the CEO Survey explored the views of 174 CEOs in Romania. The full Romania CEO Survey report can be found here.