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More than 60% of Central European CFOs expect revenue growth this year. According to those surveyed, the average GDP growth rate in the region in 2024 will be 1.1%.

Central European companies have become accustomed to operating in a difficult economic environment, say chief financial officers (CFOs) from Central European countries. While more than half of those surveyed still expect inflation to rise, at the same time more companies are assuming increased investment spending, according to the ‘2024 Central Europe CFO Survey’ report by consulting firm Deloitte. 

There was a decrease in uncertainty among those surveyed, though this sentiment was expressed by more than half of respondents.

The 16th edition of the 2024 Central Europe CFO Survey involved 544 CFOs from 15 Central European countries. They took part in a survey between October and December 2023, the results of which gauged the mood of CFO executives from companies in the region. The respondents also shared their forecasts for the next 12 months.

The collected responses are reflected in the CE CFO Confidence Index, which consists of three sub-indexes. Each reflects CFOs’ outlook on the business environment (Business Environment Confidence Index), economic processes (Economy Confidence Index) and the performance prospects of the companies represented by the respondents (Company Perspective Confidence Index).

Growing CFO optimism

The latest reading of the main index indicates a significant improvement in sentiment among surveyed CFOs. The Confidence Index value for 2024 was 17 points. This is not only nearly double the previous year’s score, but also the index’s highest level since before the COVID-19 pandemic.

2024 Central Europe CFO Survey

“The results of the latest edition of the survey provide evidence that business is adapting to the new, tougher environment. Although there is still instability – the war in Ukraine continues, tensions in the global economy have only slightly decreased – this is an improvement over the situation a year ago. Global supply chains are running more smoothly and commodity prices are also normalizing. Having learned from the experience of recent years, CFOs see this improvement in their environment and are optimistic about growth prospects despite the many numerous challenges,” says Julia Patorska, partner, leader of the economic analysis team, Deloitte.

“This result was achieved primarily due to a significant improvement in expectations of the business environment. Indeed, the latest sub-index score monitoring this area was 31 points, a change of as much as 77 points compared to last year’s survey. This is due, among other things, to a 10 p.p. drop in the percentage of respondents declaring high uncertainty. At the same time, such a response is still given by 51% of respondents. At the beginning of 2023, most CFOs looked to the near future with high degrees of pessimism. Today, we know that most industries have dealt with difficulties of various kinds, which in turn makes the current mood and outlook for the next twelve months much more optimistic. We can describe the general mood among representatives of various industries as cautiously optimistic. Despite the persistent challenges, managers seem to assume that the organizations they represent will follow a growth path this year,” says Eliza Przeździecka, PhD, senior economist in the economic analysis team, Deloitte.

Economic realism

Although this year’s Economy Index score was the lowest of all the sub-indexes, compared to last year, respondents express greater optimism about economic factors. When asked about the expected GDP growth of Central European countries in 2024, the most frequently indicated answer was 1.1%. A year earlier, the most responses indicated a growth rate three times lower. The percentage of CFOs predicting higher unemployment over the next several months, on the other hand, fell by 30 p.p. to 38%. Fewer and fewer managers also assume an increase in the rate of inflation: 57% vs. 70% a year earlier. Survey respondents also shared their opinion on the projected rate of price increases in their country and in the Eurozone as a whole. The average inflation prediction in the former category was 6.1%, while for the Eurozone it was 4.1%. The biggest differences can be seen in the predictions for Poland, among others – 7.5% vs. 4.3%.

“In the results of the current survey, I notice a lot of caution from CFOs. Respondents see an improving business environment and are also more optimistic about their company’s prospects. At the same time, however, they do not believe that the situation is also improving more broadly, in the economy as a whole. This is well illustrated in Poland – 57% of respondents estimate that GDP growth will not exceed 1.5% this year, and only 8% expect growth above 2.6%. Meanwhile, half of the economists surveyed by the NBP expect GDP growth of 3 percent or more. So there is room for a positive surprise,” says Aleksander Łaszek, senior manager in the economic analysis team, Deloitte.

Investments up

Survey participants are more positive about the growth prospects of the companies they represent. This is evidenced by the latest reading of the Company Perspective Confidence Index sub-index, which was 11 points higher than 12 months ago. In turn, the percentage of CFOs declaring greater optimism in this area rose to 36%, though this is still lower than in 2021 or 2022.

The change in attitude is related to changing expectations regarding companies’ projected revenues. Thus, 61% of respondents expect more revenue in 2024, up 3 p.p. from the previous year. There is also a not insignificant change in sentiment regarding operating margins – 35% of respondents expect them to increase, up 10 p.p. from a year earlier. An increasing number of entities also intend to increase investment (39% vs. 36% a year earlier) and plan to increase employment (32%, up 2 p.p. from the end of 2022).

“CFOs’ approach to the region’s economic recovery outlook is characterized by realism. Although a significant number of respondents anticipate the possibility of a positive scenario, the distribution of responses indicates that most respondents are cautious. On the other hand, it appears that companies have learned to function in a highly volatile environment. Greater certainty, in turn, prompts them to take pro-development measures, as evidenced, among other things, by the declared increase in investment expenditures,” says Robert Nowak, CFO Program Lead, partner in Tax Advisory, Deloitte.

Sylwia Ziemacka
Sylwia Ziemacka
“I believe our unique selling point is that we focus on what brings us together. Poland Weekly offers something you will not find anywhere else: a truly international and unifying perspective focused on content that builds cooperation and mutual understanding. This attitude doesn't make us naïve, but it allows us to focus on mutual understanding and a search for solutions. There are so many new challenges that we are all facing, such as energy transformation, climate change and supply chain disruption, to name but a few. By working together and sharing good practices, we can achieve so much more.”