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2023 CE CFO Survey

CFOs of the region report record levels of risk

Deloitte’s latest survey finds that the economic outlook is primarily affected by the war between Russia and Ukraine, but inflation and supply chain problems also feature prominently. The survey on economic prospects and forecasts has been conducted every year since 2010.

Budapest, 22 February 2023

Unforeseen risks on the horizon

In its CFO Survey, Deloitte Central Europe polled more than 600 corporate finance executives, focusing on their organizations' challenges, the business environment they anticipate, and the factors that will affect their operations in 2023.  Risks will arise mainly from geopolitical issues, supply chain disruptions, and inflation.

CFOs in the countries surveyed are expecting an average of 0.33% GDP growth this year, which is a significant slowdown from the 2.3% rate seen in 2022 and similar to the expected 0.25% growth figure measured at the time of the coronavirus epidemic. More than half of the respondents in Hungary, 56% anticipate a lower than 0.5% economic growth rate.

Looking at the sectors, expectations for the Business & Professional Services (-86%) and Technology, Media, Telecommunication (-73%). The most pessimistic, although every sector is more pessimistic than last year. With economic growth slowing noticeably, many more are expecting unemployment to rise. Two-thirds of the finance executives believe this is the thing to prepare for.  This rate in Hungary is particularly prominent in regional comparison, with 85% of executives expecting the unemployment rate to rise.

Survey participants predict that inflation will remain high, with 70% expecting it to rise from 2022. In contrast, Hungarian CFOs have the highest rate to expect inflation to go down in the coming year. 

Decreasing risk appetite

More than half (55%) of corporate executives consider financial and economic uncertainty to be high, which is up from 43% of those believing so last year.

The questionnaire also surveyed the most important risks Central European companies are facing. According to finance executives, these include mainly falling domestic demand, geopolitical risks, and a shortage of skilled labour. It means that they expect demand to fall as a result of the economic decline, which can weaken business results, while external risks remain high due to the war in Ukraine. Lack of skilled labour has been a major vulnerability of the region for years, with labour shortages present in most of the countries and the expected rise in unemployment not seeming likely to help.

The 61% level of financial and economic uncertainty measured in this year’s Deloitte Central Europe CFO Survey has been the highest since 2015. Given this extremely high uncertainty, the majority (83%) of respondents do not feel this is a good time to take greater risks on to their
balance sheets.

In the three surveys between 2020 to 2022, CFOs saw internal financing and bank loans as the most attractive sources of funding for their companies. In their predictions for 2023, equity (30%) has overtaken bank borrowing (25%), while internal financing (54%) remains the most attractive form of funding. This is mainly due to interest rate levels being globally on the rise, which significantly impaired the competitive position of bank loans.

Finance executives have become much more negative about the prospects of their own companies, primarily due to the high levels of inflation, slowing growth, and tight monetary policy.  All in all, expectations for operating margins have declined sharply, from 4% in 2022 to -17% for 2023, which is the lowest level since the survey began more than 10 years ago.

Diminishing prospects have made corporate executives much more cautious about investment, and their expectations for employment to increase have also lowered. At the same time, half of the CFOs across the Central European countries we surveyed say the levels of employment in their companies will not change. They might even think of hiring despite the current harsh environment, with barely a tenth of CFOs considering cost cuts a primary goal for this year.


The full study is available by clicking here

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