Romanian entrepreneurship, under the limit of emergence

With an index of 49 points out of a possible 100 for the first semester of 2024, Romanian entrepreneurship is below the threshold of emergence, according to the work carried out by the National Council of Small and Medium-sized Private Enterprises and presented yesterday by Florin Jianu, president of CNIPMMR.

Florin Jianu, president of CNIPMMR said: "In the first semester of 2024, the score is 49 points, which means that we have moderate entrepreneurship in our country. If we perform on some indicators, we can move into the emerging entrepreneurship zone, between 50 points and 75 points. Above 75 points, it means solid entrepreneurship, but there is a long way to go. The created index puts a real mirror in front of us, looking at Romanian entrepreneurship and the way it evolves. It is an index that is based on the aggregation of 25 indicators, of which 15 are real macroeconomic indicators obtained through the prism of data provided by the National Institute of Statistics, the National Bank of Romania, the Ministry of Labor, the National Trade Registry Office. The 15 indicators have a weight of 75% in the Romanian entrepreneurship index. 25% is given by the perception of entrepreneurs based on a survey conducted by CNIPMMR on 250 companies".

According to the statistical, macroeconomic indicators, we are best positioned at the stability of the exchange rate - 5 points (maximum), followed by the unemployment rate (2.93%) and the average net salary (5079 lei monthly) with 3.75 points each, the real rate of growth of the Gross Domestic Product, where the index shows 3 points, as well as the dynamics of the number of commercial companies (an increase of 68,139 active companies in 2023 compared to 2022) and the dynamics of the average turnover (increased by 16.1% in 2022 vs. 2021). It is followed by the dynamics of taxation on the labor force, administrative compliance and the country rating, with 2.5 points each, the tax on dividends and the deficit of the trade balance (28.94 billion euros) which were noted with 1.75 points each. The dynamics of foreign direct investments received only 1.5 points due to the 34.39% reduction of these investments during the past year compared to 2022, while the dynamics of the profit and income tax and the interest rate (6%) relative to the inflation rate (10.4%) received only 1.25 points each.

In these statistical, macroeconomic indicators, the inflation rate (10.4%) received zero points because it is still quite high.

According to the Entrepreneurship Index Survey, the weakest areas are bureaucracy and taxation which together received 0.5 points, inflation with 0.75 points, the labor market and business lending with 1 point each.

Regarding the low perception of entrepreneurs regarding lending to companies, Sergiu Manea, CEO of BCR, present at the presentation event of the Index of Romanian Entrepreneurship, stated: "The credit market is not a restrictive one in terms of lending conditions, including lending prices. In terms of lending conditions and prescribed margins, including interest, the conditions are not restrictive at this time. That 1 point out of 2.5 maximums on entrepreneurs' perception of lending forces us to do more, however. But I note that among the systemic banks, we see a significant increase in loans on the balance sheet every year, and this is an important sign of growth in corporate lending."

Regarding the macroeconomic statistical indicators included in the index made by CNIPMMR, Cristian Stănică, the president of the National Strategy and Forecasting Commission, stated that for the year 2024 the institution he leads has forecasted an economic growth of 3.4%, compared to the growth of 2.1% recorded by the INS at the end of last year.

Cristian Stănică specified: "The modification of the initial estimates will be made in the autumn forecast based on the data provided by the INS. The Romanian economy has a growth potential. In the medium term, this growth will be supported by public investments as it was in 2023. The economy will be helped by the funds allocated for the investments provided for in the PNRR and by private consumption slightly below economic growth". He also said that, according to the data of the National Strategy and Prognosis Commission, 60% of the turnover at the national level is made by SMEs, small and medium-sized companies have 2.7 million employees, that is 52% of the employees at the national level . Moreover, the gross profit achieved last year by SMEs exceeded 167 billion lei, Cristian Stănică also said.

For his part, Tudorel Andrei, the president of the National Institute of Statistics (INS) said that the Romanian entrepreneurship index, like any aggregate indicator, is welcome and captures a side of the economic and social environment.

Tudorel Andrei mentioned: "In this index, we have elements related to macroeconomic analysis and elements related to the financial area, two areas that determine the dynamics of the economy. Then we have elements related to the measurement of economic and social indicators as well as the state of the economy from the point of view of the perception of those who work in the economic environment. We have an aggregate indicator that can provide a certain evaluation of the economic environment at the level of the last semester. However, I have a few recommendations. First of all, it is possible that in certain periods the dynamics of the economy will be positive in relation to the value of this indicator. For example, I think that in the current conditions it is possible that a growth rate of 2.8% or 3% will send a positive message to the economic environment compared to the 5% growth that we had 10 years ago.

The second recommendation is related to the inflation rate. Fortunately, we are on a downward curve, below 10%, but it will be difficult for us to go in the 0-0.5 range. The rate of 5% or 6% is likely to give a positive message to entrepreneurs".

The Romanian Entrepreneurship Index will also be made available to the European Commission, OECD and other international bodies interested in the evolution of the business environment in our country.