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Analysts: Romanian economy will go through ample restructuring

July 22, 2024

In the years to come, Romania will go through an ample restructuring process, on the background of challenges generated by technological changes, by the labor force crisis and fiscal changes, experts from Sierra Quadrant warn in an analysis on prospects of the Romanian business environment.   “Economy, the world we live in, no longer looks like what happened 20-30 years ago. The level of impredictibility, of uncertainty, has grown a lot, while business plans can no longer have a liniar evolution. Times when you could make plans for 4-5 years, counting on economic growth, on consumption advance, on establishing fiscal law,” study authors say.   In the new economic reality, when volatility is important, while prospects must take into account a lot of factors, from the quick innovation rate to AI and the change of consumption customs, the source mentions.   According to experts from Sierra Quadrant, Romanian economy risks to lose significantly for the competitiveness chapter, to become irelevant on the next years, if it does not restructure operations and will not adopt strategic planning , solutions meant to anticipate risks and exploit AI advantages of innovation and research.   According to the company specializing in business restructuring, 2025 will bring a new cycle of econnomic problems, from fiscal to structural ones which consider business relevance, competition and economic evolution in general.   “The debt crisis at world level is deepening and solutions are already known. Tax increases, reducing budget expenses, with direct effects in economy. For Romania, prospects show a rise of fiscal challenges and the deepening of problems especially in industries associated to consumption ( production and sale drops, deepening financial blocking, etc). The needed restructuring of the public system, reducing state expenses on the background of significant deficit, the new salary law and inflation will lay significant pressure on consumption, on the productive branches of economy,” the analysis shows.   In these conditions, experts say, Romanian companies should attentively prepare business plans for 2025-2027 since prospects are not positive.   “Industrial production continues to drop, economic growth is low, just 0.1% in quarter 1, while inflation continues to affect economic performance. We already witness, as estimated, a significant wave of company bankruptcies in quarter 1, likely there will be more insolvencies than in past years, especially effects of tax rises this year,” analyst said.   Sierra Quadratn estimated, at the end of 2023, that in 2024 we will see over 150,000 companies with economic problems, while data announced by the Trade Registrar after quarter 1, confirm this prediction.   Last year, over 133,000 companies were in difficulty. 16,335 companies suspended their activity, 39,031 were dissoved, 71,241 were radiated and 6,650 went into insolvency.   According to specialists, companies with most problems at present, are in trade, agriculture, industry and constructions, where tax rises, the drop of purchase power and credit limitation set up many problems.   Most Romanian firms use restructuring procedures, from arrangements with creditors to restructuring accords, when they get bigger financial problems of business functioning. At least in 2025, the great challenge for many companies in the field of small companies, will be business continuation.   “The leadership of a company must get new values, to show a high alert level, to build business models able to anticipate future challenges and opportunities, to generate strategic planning , elements which, unfortunately, are missing from many companies in Romania. Unfortunately, we are faced with a major leadership crisis, which risks influencing economic competitiveness in future years,” experts say.   With an experience of over 25 years in Romanian business, Sierra Quadrant is one of the most important companies specialized in complex management and liquidation works, with high difficulty degree, characterized by a high and diversified patrimony, through many legal problems which must be solved, at the same time with the insolvency procedure: environment report, possessing dangerous substances, litigations about patrimony, etc.  

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