Latest News  

Konieczny, FP: IT to grow from 6 to 10% of a larger GDP

Romania has been one of the best performing economies in the European Union in 2015, and some domains such as IT and agriculture will be main drivers for further growth.

2016-01-12 12:20:53 - by Bogdan Tudorache

The growth rate for Q3 places it second in the EU, after the Czech Republic, and Fondul Proprietatea estimates an overall increase of the GDP close to 4% for 2015, says Greg Konieczny, Executive Vice President, Templeton Emerging Markets Group and Fund Manager of Fondul Proprietatea (FP).

"Sectors where we see growth potential are energy, transport, IT, banking, constructions, agriculture and healthcare. The IT and agriculture, for example, have an increasing share in the GDP - the IT industry accounts for 6%, but, in our view, it has the potential to reach at least 10% of GDP in the coming years due to the strong networking infrastructure, low costs and the labor skills base," says Konieczny.

"We also expect further acceleration for 2016, backed by the expansion of domestic consumption, investments supported by improved absorption of EU funds and low level of interest rates," says he.

Domestic consumption has picked up significantly in 2015 (nearly 5% growth) and it should further accelerate this year as a result of lower value added tax (VAT) and of salary increases in the public sector. As a result, the growth rate might even exceed 5% this year, the FP official says.

The macroeconomic fundamentals are also positive – the debt is less than 40% of the GDP, the budget deficit has been under control for several years, the current account deficit for the first time in 25 years is less than 1% of GDP and inflation is, as well, at record lows. Romania is, thus, in a good shape after the programme with the International Monetary Fund.

The high rate of the economic growth, along with the strong fundamentals and the positive perspectives should result in an improvement in foreign direct investments flow, which should also be helped by the trend of relocation of production capacities from Western Europe. Moreover, Romania's attractiveness for investors should also be boosted by fiscal improvements, such as the reduction of VAT from 24% to 20%, which entered into force at the beginning of this year, and the further cut to 19% starting 2017, the reduction of dividend withholding tax from 16% to 5% and the elimination of the special constructions tax starting 2017.

"This year will be marked by two electoral campaigns which usually generate volatility that may affect investors' decisions in the short term, but we hope they will not interfere with the reformist agenda undertaken by the new Government and which is determinant for continuing the strong FDI and portfolio investments flows in Romania," says Konieczny.

"It is also important for the fight against corruption to continue, as it should lead to improvement of governance and increased efficiency of state institutions, which are the backbone to economic activity."

The agriculture sector's huge potential is still waiting to be unlocked, with the most important opportunity for large players in this sector remaining the absorption of EU funds.

The capital market also has a strong potential to develop and this was visible last year, given the fact that it was among the only three frontier markets which recorded a positive performance in 2015. We consider that the new government should take advantage of this momentum, by going forward with the structural reforms, continuing the proper implementation of corporate governance standards, which result in increased profitability and efficiency in SOEs, respecting the liberalization schedule of electricity and gas prices and by listing companies on the stock exchange.

IPOs represent the key driver in developing the capital market, which currently stands at 14% of the GDP, one of the lowest levels in the region (Poland 64%, Hungary 55%, Austria 26% and Czech Republic 22%). New companies on the stock exchange would not only boost the liquidity and attract new investors, but could also ensure a higher exposure of the pension funds to the local capital markets (they can currently invest up to 35% in equities), as well as continued growth of mutual funds sector. Only new IPOs could support the upgrade of the local capital market to emerging market status from the current frontier one.

An important point of attraction for investors is the fact that Romania'n market is undervalued. However, in light of strong economic growth and very positive perspectives, the gap between perceived valuations and fundamentals will start to close. Therefore we think that now is the right time for investors to consider buying Romanian equities.


0 COMMENTS ^ Go back to Top
WRITE A COMMENT ^ Go back to Top
 
Your email address will not be published.
Nickname
Email
Comment
Validation Code
   
 
 
NEWS
FintechOS announces results beyond expectations in 2018

FintechOS announces revenues of 6 million Eur from selling FintechOS technology in just one year from inception. This amount combines 1 million Eur from annual recurring revenue for licenses and 5 million Eur

 Read Full article »
Tremend joins Mellanox in powering the majority of Top 500 supercomputers

Tremend - one of the fastest growing software companies in Romania - has signed an agreement with Mellanox Technologies, a leading supplier of end-to-end connectivity solutions for servers and storage, with hea

 Read Full article »
Almost 19,000 entrepreneurs have already applied for Start-up Nation

The Start-up Nation 2018-2019 program has been accepting business projects for almost a month now, even though the state budget for this year has not yet been passed.

 Read Full article »
Webhelp Romania aiming for EUR 10 million turnover growth, 500 new employees in 2019

Romania's outsourcing market, which recorded two-figure growth in a year, will attract new investments and generate new jobs in 2019, a year full of challenges. After a 2018 that repositioned Romania on the map

 Read Full article »
Manpower: Robots will be your colleagues not your replacement

Fears that robots will eliminate your job are unfounded with a growing number of employers planning to increase or maintain headcount as a result of automation, staffing company ManpowerGroup said in a survey

 Read Full article »
Study: Five out of 10 employers eye lay-offs

Almost 5 out of 10 employers would proceed to lay-offs, according to a survey conducted by the National Council for Small and Medium Sized Companies (CNIPMMR).

 Read Full article »
US company Visteon looks for software developers at Timisoara

Visteon, automotive supplier focused exclusively on cockpit electronics, it is setting up a new product development center in Timisoara, Romania. The company plans to build a team of 400 employees in Romania,

 Read Full article »
Gabriela Mechea takes over the helm of ANIS

The Software and Services Industry Employers Association ANIS appointed Gabriela Mechea as the organizations' executive director, replacing Valerica Dragomir who left the association after 17 years.

 Read Full article »
Poll: 2018 was hard for recruiting – 29 Interviews to one hire

Nearly nine out of ten companies had a tougher time finding suitable employees in 2018 compared with previous years, interviewing an average 29 candidates before hiring one person, a poll by HappyRecruiter show

 Read Full article »
CBRE maintains its market leader ranking with 24 per cent market share on the Bucharest-based office segment

In 2018, CBRE, the real estate consultant managed 24 per cent of the Bucharest-based office market, according to a release of the company.

 Read Full article »
 
 
MOST READ ARTICLES
» The most appreciated companies from th...
» Webhelp Romania aiming for EUR 10 mill...
» The Outsourcing industry announces its...
» Tremend joins Mellanox in powering the...
» Manpower: Romania's labor market, more...
» Deloitte's Tech Trends 2019 report: B...
» Bucharest, in the top of cities in Eur...
» Genpact's COO: Staying ahead of the cu...
» Oracle reaches 4,200 employees and pla...
» Ascentis: The top ten HR trends for 20...
 
EDITOR CHOICE
Nomination are now open for Romanian Business Services Forum and Awards

Nominations have opened for the prestigious Romanian Business Services Forum & Awards. The 2019 awards will continue to recognize and reinforce the important contribution made by business services professionals

 Read Full article »
Study: 89 per cent of finance teams yet to embrace Artificial Intelligence

Report by Association of International Certified Professional Accountants and Oracle shows that almost 90 per cent of finance teams do not have the skills to support digital transformation.

 Read Full article »
Bucharest, in the top of cities in Europe with the largest number of experts in high-tech industry

Bucharest is among the top cities boasting the most experts in the high-tech innovative industry, with over 70,000 current employees, next to London, Dublin, Madrid or Budapest, reads a study conducted by CBRE

 Read Full article »
CBRE study: Post-millennials, the happiest about their offices

During 2018, real estate consultancy company CBRE conducted the first study dedicated to work environment in office buildings in Bucharest. The respondents have been structured in four age segments, such as Z g

 Read Full article »
Deloitte's Tech Trends 2019 report: Beyond the digital frontier

The recently released Deloitte's Tech Trends 2019: Beyond the digital frontier, as each Tech Trends report in the series conducted by the consultancy company, lobbies for embracing the increasing, often mind-b

 Read Full article »
Latest News  
 
about us | newsletter | contact | members area | GDPR policy
Copyright © 2015 by Diplomat Media Events Design by Diplomat Media Events