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Uncertainty is the only certainty

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In an environment dominated by geopolitical tensions and economic uncertainty, the latest Corruption Perceptions Index (CPI) has shown that inadequate integrity measures, increased pressure on decision-making, and rule of law abuses are eroding government effectiveness, calling for stronger anti-corruption measures. Looking at western Europe and the EU, with an average score of 66 out of 100, the 2022 CPI has identified a stagnation in anti-corruption efforts "in more than half of countries for more than a decade." "Out of 31 countries in the region, only six have improved their scores while seven have declined.
Top scorers in 2022 were Denmark (CPI score: 90), Finland (87) and Norway (84). Worst performers were again Romania (46), Bulgaria (43) and Hungary (42). Ten countries have recorded their lowest-ever scores, including United Kingdom (73), which has dropped five points since last year," the report has revealed.
Meanwhile, global business leaders are bracing for economic decline, citing geopolitical volatility, and various challenges stemming from supply chain disruptions and ongoing COVID-19-related uncertainty.
In fact, the EY CEO Outlook Pulse – January 2023 has revealed that uncertainty seems to be the defining feature of the business environment this year, with 98% of CEO respondents expecting a slower economy. However, their opinions differ when it comes to the length, depth and severity of the expected downturn.
The EY survey recorded the views of 1,200 CEOs all over the world, and notes that "48% foresee a moderate slowdown in the global economy, while more than half (55%) of those preparing for a persistent downturn fear a recession worse than the global financial crisis of 2007-08 in terms of its length and severity."
Moreover, 32% of respondents believe that "uncertainty around the direction of monetary policy and an increase in the cost of capital to be the greatest risks to future growth for their business." At the same time, "concerns over COVID-19-related uncertainty have receded, almost a third of CEOs (32%) still cite this as a key risk to their business (down from 43% in October 2022)."
The survey also shows that in spite of the negative outlook, "CEOs are on the lookout for opportunities to gain a competitive advantage. Dealmaking of one kind or another remains a priority for respondents (89%) over the next 12 months with nearly half (46%) planning to move ahead with M&A, 58% with a joint venture or strategic alliances, and 34% with divestments."
Peter Latos, Partner, Consulting, Strategy and Transactions Leader, EY Romania, said: “Notwithstanding growing economic headwinds fuelled by the geopolitical fallout from the ongoing war, Romania, despite its proximity to Ukraine, continues to buck the trend and is expected to deliver low single digit GDP growth in 2023. However, this does not mean that CEOs in Romania will be insulated from a global economic downturn. The fact that 89% of respondents are considering dealmaking of one form or another in the next 12 months resonates strongly with activity seen in the Romanian market, which recorded an increase in the number of deals in 2022 with no sign yet of this slowing. CEOs should reassess business fundamentals now, double down on core strengths and take bold decisions to address areas opportunities to drive organizational improvement.”
Find more opinions and predictions about domestic and global economic and geopolitical trends in this issue of Business Arena. As always, we will continue to keep an eye on all the developments affecting the business community.

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