Deloitte CE CFO Survey: Growing concerns about the financial and economic uncertainty

• CFOs are positive about the economic outlook and expectations for their own businesses
• Finance function is not ready for artificial intelligence
• Romanian CFOs show higher degree of pessimism compared to CE peers

More than a third (35%) of Chief Financial Officers (CFOs) across 17 Central European countries, including Romania, believe there is a high level of uncertainty in the business environment and are cautious about taking more risks onto the balance sheet. This is the main finding of the 10^th edition of Deloitte Central Europe CFO Survey covering the opinions of CFOs from nearly 700 major CE organizations from a wide range of industries and sectors, conducted between September and November 2018.

CFOs in Central Europe are positive about the economic outlook and expectations for their own businesses, as 66% of respondents believe that revenues will be higher in 2019. Nevertheless, the confidence index has slightly dropped compared to 2018, from 23% to 16%, but remains ahead of 2016 and 2017 levels.

According to the survey, more CE CFOs are risk-averse than in 2018 and think it is not a good time to take on greater risk when making financial decisions (73%). They expect operating margins to stay the same or grow and see rising costs as the biggest risk factor. When it comes to increasing costs, CFOs highlight those related to the workforce, transportation and production.

As far as employment levels are concerned, they are expected to stay the same or to increase, but there is a tendency for CFOs in Central Europe to be less willing to hire new employees.

The survey also reveals that the finance function is not ready for artificial intelligence (AI), but CFOs see benefits of robotics. The results suggest that companies across CE are not grasping the potential benefits of AI with great speed, with 77% of the region’s companies not using any form of cognitive tools, although they see accounting as a key area for AI solutions. Around half the CFOs see increased speed, effectiveness and cost reductions as the main benefits of robotics and AI solutions.

As for the Romanian CFOs, the survey shows they manifest a higher degree of pessimism compared to the other respondents, with 66% of them mentioning a high or very high level of fiscal uncertainty, compared to only 35% for those in the CE region. Almost twice as many CFOs in Romania (90%) than from the CE region believe that taking more business risks is not currently desirable.

“In terms of main factors that may negatively impact their businesses, Romanian CFOs are concerned by the brain-drain phenomenon and its impact on skilled workforce availability, the increased costs of running their business and unpredictable fiscal and business laws. Still, they remain generally optimistic about macroeconomic and business environment perspectives,” said Farrukh Khan, Audit and Risk Advisory Partner, Deloitte Romania, leader of the CFO Survey program in Romania.

According to the survey, 85% of Romanian CFOs expect consumer price index to rise in 2019, with costs of running their business becoming a concern. Materials, workforce and services are all expected to cost more over the course of this year. More than half of the Romanian respondents (51%) expect GDP to grow in 2019 and 75% of them will budget revenue growth in 2019, slightly more optimistic compared to peers in the region (66%).

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Deloitte Romania is one of the leading professional services organizations in the country providing, in cooperation with Reff & Associates, services in audit, tax, legal, consulting, financial advisory, risk advisory, business processes and technology services and other related services with more than 1,200 professionals.