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Investors remain moderately optimistic

Amid news of skyrocketing energy prices and inflation, Romania's 6.5% year-on-year advance in the first quarter of 2022 came as a bit of a surprise to many experts. Data released by the National Statistics Board (INS) showed that, compared to the previous quarter, Romani''s GDP gained 5.2%, after a 1% increase in Q4 2021. In this context, an Erste Group Research report noted that "based on high frequency data, on the supply side, industry advanced by 2.5% q/q and retail sales by 0.8% q/q in 1Q22.
Consumer services ex-auto grew by 1.5% q/q, while auto services by 3.6% q/q in 1Q22. In the two months of the year, construction increased by 9.8% vs 4Q21 and services for companies by 6.1%." However, the report indicated that "all in all, high frequency data did not point out to such a sharp sequential acceleration in GDP growth."
Even so, the Erste Group Research mentioned that "economic confidence improved to 103.0 in 1Q22 from 102.3 in 4Q21."
While on the subject of economic con­fi­dence, the Foreign Investors Council has released its Business Sentiment Index (BSI). The spring 2022 survey shows "a mo­de­rate optimism among investors, however it is impacted by uncertainty and current challenges such as: energy market crisis, military conflict in Ukraine, infla­tionary pressures affecting supply chains and customer demand, including the erosion of end-user disposable income, which possible effects were highlighted in the May edition of the Inflation Report pu­blished by the National Bank of Romania (NBR)."
According to FIC's survey, "companies want to invest in Romania, half of the respondents estimate that for this year the planned investments are at similar levels to last year, and 40% of respondents say they plan to invest larger amounts com­pared to the previous period. NBR repor­ted  foreign direct investments worth seven billion euros for 2021 - representing the highest values for foreign invest­ments."
Moreover, the survey points out that more than 50% of the respondents plan to hire more staff. "The sentiment remains that there is a need for labor, but un­for­tunately the perception of the availability of adequate staff remains reserved, only 45% of respondents believe that labor force is competitive. The results also capture the tendency for hybrid work, with 45% of companies estimating that more than a quarter of their employees will continue to work from home."
The survey continues to reveal poor re­sults in areas including infrastructure, transparency, public policy coherence, and bureaucracy. "65% of respondents to the spring 2022 edition believe that these areas remain uncompetitive and that re­forms are needed to close the gap between Romania and other European countries."
Find more opinions and predictions about domestic and global economic and geopolitical trends in this edition of Business Arena. As always, we will continue to keep an eye on all the issues affecting the business community.

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