Ooni Koda
  1. Home
  2. /
  3. Newsfeed
  4. /
  5. Trade: Frames analysis: Retail, main engine of Romanian...

Trade: Frames analysis: Retail, main engine of Romanian economy, shows signs of failure

April 24, 2024

Retail trade shows the first signs of crisis, amid the effects of inflation and tax increases, and without measures to support consumption, Romania risks losing its most important engine of economic growth, a Frames analysis informs."The decrease in purchasing power and the accentuation of problems in supply chains, as a result of the measures to cap electricity, gas and basic food, risk leading Romania to a second consecutive quarter of economic decline, that is, to technical recession," the source says.The highest inflation in the EU was recorded for the second consecutive month in Romania and strongly diluted people's incomes, and the effects are seen in the significant decrease in sales from trade, the most important engine of the economy, the consulting company says.According to data from the National Institute of Statistics, quoted in the release, the volume of turnover in retail trade (excluding trade in motor vehicles and motorcycles), gross series, decreased overall by 17.2% in January 2024, compared to the previous month. Trade in food, beverages and tobacco decreased by 22.2%, fuel sales were lower by 14% and trade in non-food products decreased by 13.9%.The consulting company warns that the significant decrease in retail is all the more alarming as it comes in the context of tax increases that came into force on January 1, 2024.According to consultants, retail trade and distribution are essentially the most important contributor to GDP formation, 21% in 2022, and revenues from this sector represent about 40% of total revenues in the economy.In the last 15 years, the retail and distribution sector has paid taxes of 448 billion RON, of which half VAT and 36% contributions for work. About 12% to 13% of all taxes collected to the public budget come from this sector, the largest contribution at national level."Therefore, the negative trend noted by statistical data is extremely important. Because it shows that the economy is going through a period of crisis, hit by the most insidious disease - inflation, for which it seems that we do not have an effective treatment," the Frames manager Adrian Negrescu, said.The retail and distribution sector in Romania employed over 800,000 people in 2022.The data on inflation evolution, announced by the Institute of Statistics, come to confirm that the caps decided by the government on electricity, gas and basic food do not work, proof that we have, for the second month in a row, the largest price increases in the EU, which is confirmed by Eurostat data.According to the Frames analysis, the gross margin (mark-up) of the top 10 players in domestic retail has decreased significantly in recent years, from 18% 10 years ago to 11% in 2022, the last year for which final financial data are available at the Ministry of Finance.According to statistics, at a turnover figure of 83 billion RON in 2022, the top 10 retailers in Romania registered a net profit of 2.5 billion RON. 74 billion RON were expenses with goods, and 5.87 billion RON represented the salaries of almost 80,000 employees (the first 10 retailers).Consultants believe, in this context, that the worrying dynamics of Romanian retail is primarily related to the accelerated decrease in household incomes, significantly affected by inflation. Even if, compared to the European average, the minimum wage in Romania has increased twice as fast in the last 5 years (65% in Romania, vs 35% in the EU), it now represents only 54% of the minimum wage in the EU (vs 45% 5 years ago). In Romania, the minimum wage is about 663 euros gross compared to the EU average of 1,218 euros, they explain."So the problem comes from the size of wages, not from the price of products or mark-ups. Proof that, according to Eurostat data, the average price of consumer products in Romania represents 59% of the EU average," Frames analysis says.Under these circumstances, the company claims that official statistics come to outline the picture of a significant economic crisis towards which Romania is heading."After a first quarter of economic downturn (Q4 2023), if we also have economic downturn in the first three months of 2024 (Q1 2024), this essentially translates into the notion of technical recession. The Romanian economy is currently operating with the handbrake on. Tax hikes, e-bills and inflation have further exacerbated problems in economic chains, and the outlook is increasingly uncertain."At the same time, they warn that, even if Romania avoids recession, the economic dynamics will suffer, especially as the prospects for 2025 indicate new tax increases.The Frames analysis was carried out based on a business study conducted by the consulting company dedicated to companies with CAEN (Classification of activities in the national economy) code 4711 - Retail in stores that have, besides their main sales of food, beverages or tobacco, several other types of goods, such as clothing, furniture, household appliances, hardware, cosmetics, etc.The processed data refer exclusively to companies that have this main activity code and are obtained from the Trade Registry and the Ministry of Finance based on public information declared by companies and Frames estimates. The analysis also includes official INS, CNP (National Prognosis Commission) and Eurostat data.

Read in full - click here
Romanian state-owned gas producer Romgaz sues European Commission over CO2 storage quotas

Romanian gas producer Romgaz (BVB: SNG) has filed an action with the European Court of Justice against the European Commission, requesting the annulment of certain regulations that impose CO2 storage quotas on oil and gas companies. The company considers the quotas disproportionate.  It is the first time that Romgaz has initiated a direct action against […]

Bucharest residents invited to donate clothes, food to families affected by residential building explosion

Bucharest residents can donate clothes in good condition, non-perishable food, and toys for the families affected by the explosion that left 3 dead and many others injured, and nearly collapsed the apartment building in District 5 on Friday, October 17.  "Following the devastating explosion in District 5, entire families have been left without housing, and […]

Romanian SMR project developer announces contract with global nuclear software leader

RoPower Nuclear, the developer of the SMR (small modular reactor) project in Doiceşti, Romania, announced the signing of a contract with Studsvik Scandpower, one of the global leaders in software dedicated to nuclear fuel analysis, on Friday, October 17.  The president of the Swedish group emphasized that Romania is setting an important precedent for the […]

Energy regulator probes gas company response following deadly explosion at Bucharest apartment building

Energy regulator ANRE has launched an investigation into whether the gas distributor followed proper safety procedures before the powerful explosion that killed three people and injured others at an apartment building in Bucharest’s Rahova district on Friday morning, October 17. According to

Microsoft: Romania ranks 52nd globally in terms of impact of cyberattacks in the first half of 2025

In the first half of 2025, Romania ranked 52nd worldwide among the countries most frequently affected by cyber activities, according to the new Microsoft Digital Defense Report.  The sixth annual report, covering trends from July 2024 to June 2025, emphasizes that traditional security measures are no longer sufficient. Modern defenses and strong collaboration between industries […]

Romania’s Via Transilvanica among winners of 2025 Europe Responsible Tourism Awards

Via Transilvanica, the long-distance trail that traverses Romania’s cultural, historical, and natural landscapes, has been awarded silver in the “Peace, understanding and inclusion” category at the 2025 Europe Responsible Tourism Awards. The initiative is organized by the International Centre for Responsible Tourism Global (ICRT Global). The award ceremony took place at the Press Club Brussels […]