Ooni Koda
  1. Home
  2. /
  3. Newsfeed
  4. /
  5. ING Analasys: Growth slows in Romania but the...

ING Analasys: Growth slows in Romania but the outlook is brighter

July 8, 2024

Friday’s key takeaway is that consumption is approaching a cruising speed from the ‘good old times’. That brings back external imbalances. We think that this trend will continue. Investments will remain robust while external demand is helping a little. We keep our 2.8% year-end forecast, https://think.ing.com/ reads.   Compared to the same quarter of 2023, Romanian GDP growth slowed sharply from 3.0% in the last quarter of 2023 to 0.1% in the first quarter of 2024, matching the flash release. A cautious look at the breakdown shows that the economy is not necessarily performing that poorly. Private consumption rose 3.3% and was a key growth contributor, adding 2.6pp to the 0.1% growth, followed by investments, which rose 6.6% and added 1.3pp. That said, the upward pressure of consumption on imports neutralised most of the gains, especially services imports.   Exports remain weak despite recent signs of life shown by both local and German industrial production. Overall, net exports subtracted 2.6pp from growth, cancelling private consumption's positive contribution.   Overall, the two main growth engines, consumption and investments, seem to be running decently. And both continue to have solid prospects for the year. In short, we think that consumption will continue to receive solid support from credit activity and respectable real incomes, while investments will continue to post still-robust growth rates as public infrastructure projects are in full swing.   Given a slight improvement in the European economy overall, which should eventually feed into Romanian industrial exports, our view is that the economy still has decent growth prospects, despite the apparently weak start to the year.   Delving a bit into the production side of the economy, still-weak industry and services for companies were a drag on output. That said, in line with the consumer optimism shown by retail sales, it seems that Romanian consumers enjoyed living in the moment when it comes to entertainment. Recreation and cultural activities posted the strongest yearly growth this quarter (+7.0%), compared to other components, contributing by 0.2pp to the overall growth, similar to the ICT sector.   At this point, our 2.8% annual growth forecast for 2024 seems quite optimistic, given it would take particularly robust quarterly expansions (say 1.4%-1.5%) for the rest of the year in order to reach that figure. That said, we're choosing to stick to our forecast given that we see very strong momentum in the private consumption sector, new lending production is at historical highs, while public investment will continue, and external demand should turn more supportive.    On top of all that, the fiscal stance looks set to remain stimulative this year as correcting the budget gap doesn’t seem to be a priority in the current electoral context. And, as we’ve seen before, statistical data revisions should not be excluded.

The text of this article has been partially taken from the publication:
http://actmedia.eu/daily/ing-analasys-growth-slows-in-romania-but-the-outlook-is-brighter/108912
Read in full - click here
From hopelessness to hope: A Romanian orphanage survivor’s path to healing in IZIDOR, a short film

Mixing animation and live action, a 30-minute short film titled IZIDOR takes audiences on a haunting yet hopeful journey of an abandoned child's path to love and healing. Based on the real-life story of Romanian Izidor Ruckel, the production portrays his early years in an orphanage of the communist regime, neglected and abused, while highlighting […]

Romania’s national bank maintains monetary policy interest rate at 6.5%

The Board of Directors of the National Bank of Romania (BNR) decided to maintain the monetary policy interest rate at 6.5% per year, as well as the lending facility rate at 7.5% per year in its meeting on Friday, February 14. Additionally, BNR kept the deposit facility rate at 5.5% per year. BNR initiated its […]

Bucharest Exchange-listed DN AGRAR plans investments in second compost factory and solar panels

DN AGRAR Group, the largest integrated livestock farm in Romania, listed on the Bucharest Stock Exchange (BVB symbol: DN), announced plans for financing new investment projects set to begin in 2025, with a total value of approximately EUR 3.4 million. The planned investments include a new composting factory at the Lacto Agrar farm, the second […]

Romania faces coldest week of this winter with snow and freezing weather, meteorologists say

Romania is experiencing its coldest week of this winter, with snow and temperatures dropping as low as -20°C, according to meteorologists quoted by Digi24. In the southern and southeastern parts of the country, including Bucharest, snowfall is expected to reach up to 20 cm, and blizzards are expected to make...

Romanian foreign minister: NATO eastern flank states must participate on Ukraine peace discussions

Romania’s foreign minister, Emil Hurezeanu, argued during a meeting at the Munich Security Conference on Sunday, February 16, that NATO eastern flank states must participate in discussions on all aspects that guarantee a just solution to the war in Ukraine. Hurezeanu made the statements during a meeting with counterparts present at the Munich Security Conference […]

PwC Autofacts: Romania's new car sales set to grow by 1.1% in 2025, production expected to decline

New car sales in Romania are expected to rise by 1.1% in 2025, compared to the previous year, with the country being one of only two markets in Central Europe, alongside Slovakia, to experience growth, according to the latest PwC Autofacts report. Slovakia is expected to see a 2% increase in sales, while Poland and […]