“The banking sector, in Romania and globally, was hit more severely than other sectors. I believe that in the same way the stock market foresees an economic rebound, banks that have felt the pressure of capital needs and provisions, are foreseeing a more rapid revival,” the President of Banca Transilvania lender, Horia Ciorcila, said.
Managers are unhappy about the role the government has had in the economy so far. According to the Deloitte study, certain measures have made things worse for the business environment. “Other governments realized that markets cannot handle [the crisis] on their own, and that they need the state to take a technocratic role and act swiftly,” the study coordinator, Deloitte Romania Partner Antonis Ioannidis, said. Deloitte interviewed more than 300 top managers from eight industries for the study. They said that the government could promote an economic rebound through tax exemptions to boost investments (28 percent), by directing budget spending to public investments (20 percent), and through regulation framework changes (14 percent).
The main problems of companies in the midst of this crisis are lower demand, exchange rate variations, difficult access to and higher costs of financing.
Other “costs” of the economic crisis, according to managers, are shifts in market shares of companies in most industries, market consolidation, including through mergers and acquisitions, higher productivity and efficiency of local companies, and this is the “cost” of the economic crisis, which is to end in the second half of 2010.
However, most CEOs expect to gain market share during this crisis. “The fact that local companies are thinking positive and estimating to increase their market share is a good sign. Some 70 percent of respondents are confident that their business will have a stronger position when the crisis is over,” according to Ioannidis.
According to the study, the local economy will be subject to a consolidation wave, given that foreign direct investment will no longer be a dominant feature of the economy. More than half of managers interviewed say that they will use mergers and acquisitions as tools to reach their strategic goals.
“We are to witness a sound consolidation period in the second half of 2009, and especially in 2010. For the time being, sellers still have difficulties accepting the price offered. But we will see deals, especially of distressed assets, in the second half of the year,” Ioannidis said.
“It is obvious that we are facing an unprecedented crisis, the worst since the 1929 Great Depression. No one has the remedy for this crisis. We look at what was done badly during the 1929 crisis, and are trying not to make the same mistakes,” Deloitte Romania President, George Mucibabici, said.
