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Virus rattles investor confidence

The World Health Organization (WHO) notices worrying pandemic trends in southern Europe and the Balkans, with Romania setting new single-day records for Covid-19 cases. In this context, investors' confidence in the Romanian business climate has dwindled, while there are only moderate expectations regarding the 2020 business results, according to AmCham's 2020 edition of the Business Barometer Survey.

According to the report, some 50% of the responding companies expect to see lower revenues, number of employees and investments compared with the previous fiscal year. In fact, 18% of the respondents estimate a turnover decrease in excess of 25%, 24% expect a contraction between 10 and 25%, while 29% anticipate a 10% turnover decline this year.
On a positive note, the same report points out that digital infrastructure quality is the most valued market condition that Romania has to offer, rated very good by 20% of the respondents. "The quality of human capital comes next, considered very good by 8% of the respondents and good by 45%. Ranking third, similarly to the 2019 edition, is the corporate tax level," the report said.
Commenting on the barometer results, AmCham Romania Vice-President Omer Tetik said: "I would like to point that companies have expressed a relatively optimistic outlook  regarding the economic recovery, with 45% considering most likely a midterm recovery - the U shape and 11% a rapid recovery following the pandemic shock, the V shape scenario. However, this perspective can only become a reality on condition that firm measures will be adopted to restore companies' confidence in the Romanian economy, especially as almost half of the participating companies have no plans for new investments in 2020."
The country's EU membership is seen as the highest competitive advantage, with 83% of the responses, 5% up from the 2019 AmCham Barometer.
Meanwhile, central bank (BNR) governor Mugur Isrescu has recently noted that public health developments continued to generate "unprecedented uncertainties and major risks to the outlook for economic activity and the functioning of financial markets, with an impact on macroeconomic stability and financial stability."
He added: "Therefore, the BNR will further monitor all relevant developments and update the assessments, while continuing to act towards providing the necessary liquidity to the banking system (without affecting the relative stability of the leu exchange rate), in the conditions of a gradual and sustainable reduction of interest rates; the measures will be carefully calibrated so as not to discourage internal saving, which is the main source of financing for the real economy and the budget sector."
Find more opinions and predictions about domestic and global economic and geopolitical trends in this edition of Business Arena.

This is also available in our print edition of Business Arena.

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