Market Research Logo

Romania Country Report - June, 2016

Romania Country Report - June, 2016 The report covers info as of June 28.

Rising private consumption pushed up both the production and the expenditure sides of GDP by 4.3% y/y in Q1, data from the statistics office show.
Retail sales soared by 19% y/y in Q1 in volume, as real wages surged by 15% y/y, the propensity to saving plummeted because of diverse factors including interest rates and consumer confidence. Some of the massive increase in mortgage lending also fuelled consumption, as loans were used to buy existing properties.

Household consumption increased by 9.2% y/y and contributed 6.6pp to the GDP advance, while on the production side, services - most likely wholesale and retail trade - capitalised on the consumption euphoria and captured 13.1% more value added than last year, contributing 2.1pp to the GDP growth.

Key Points
Romania’s Social Democratic Party dominates local elections
GDP soars by 4.3% y/y in Q1 on rising consumption; GDP per capita second lowest in EU
Industrial output accelerates to 3.5% y/y growth in April
Construction work 12.6% up y/y in April as more civil engineering projects launched
Retail sales 19.1% up y/y in April
Headline inflation hits minus 3.5% y/y before expected upward correction in June
Average net wage growth further accelerates in April; century needed for Romanian labour cost to converge with EU28 average
Registered unemployment falls 11% y/y in April; employers report strongest hiring plans in eight years
Budget balance posts 0.1%-of-GDP deficit in Jan-May
EU funds absorption rate for 2007-2013 budget hits 69.2% one month before deadline
Public debt rises to 38.3% of GDP at end-April
NPL ratio down 6.18pp to 13.11% at end-April
Loan portfolio of banks 2.4% up y/y at end-May on strong mortgage lending
C/A balance deteriorates to 1.1% deficit of GDP in Jan-Apr
Export growth accelerates to 6.9% y/y in April, imports 9.8% up y/y


EXECUTIVE SUMMARY 5
POLITICS 6
Romania’s Social Democratic Party dominates local elections 6
President objects to bill that weakens anti-corruption regulations 6
Protest against Parliament’s recent unpopular decisions 7
REAL SECTOR 8
1. Corporate, structural reforms 8
2. GDP, forecasts 8
CFA confidence index increases for third straight month in May 8
World Bank keeps growth projections for Romania unchanged 8
GDP soars by 4.3% y/y in Q1 on rising consumption 8
2015 GDP per capita second lowest in EU, Eurostat says 10
3. Industry, Constructions, Retail 11
Industrial output accelerates to 3.5% y/y growth in April 11
Electricity consumption 11.3% up y/y in January-April 12
Construction work 12.6% up y/y in April as more civil engineering projects launched 12
Retail sales 19.1% up y/y in April 13
4. Prices, Inflation 15
Headline inflation hits minus 3.5% y/y before expected upward correction in June 15
Industrial price inflation moves upward to minus 2.95% y/y in April 15
5. Labour Market 17
Average net wage growth accelerates in April 17
Century needed for Romanian labour cost to converge with EU28 average 17
Registered unemployment falls 11% y/y in April 19
ILO unemployment remains subdued in Romania amid tight labour market 19
Romanian employers report strongest hiring plans in eight years 20
FISCAL SECTOR 21
Romania records highest VAT gap in CEE in 2015, PwC study shows 21
Finance minister rules out 5pp cut in social security contributions… 21
… BUT REMAINS committed to going forward with tax cuts, cites robust tax collection 22
1. Budget Execution 22
Budget balance posts 0.1%-of-GDP deficit in Jan-May 22
EU funds absorption rate for 2007-2013 budget hits 69.2% one month before deadline 24
2. Public Debt 25
Public debt rises to 38.3% of GDP at end-April 25
FINANCIAL SECTOR 26
1. Bank Loan Quality 26
NPL ratio down 6.18pp to 13.11% at end-April 26
Overdue loans 13.4% down in Mar-May 28
2. LOANS, DEPOSITS 29
Loan portfolio of banks 2.4% up y/y at end-May on strong mortgage lending 29
3. CORPORATE 31
BCR reportedly completes sale of €1.1bn NPL bundle 31
Insurance market expands 5.4% y/y in first quarter 31
Leasing market 30% up y/y to €456mn in first quarter 32
EXTERNAL SECTOR 32
1. Balance of Payments 32
C/A balance deteriorates to 1.1% deficit of GDP in Jan-Apr 32
Foreign direct investors re-invested €502mn of €1.8bn Q1 income 33
2. Foreign Trade 34
Export growth accelerates to 6.9% y/y in April, imports 9.8% up y/y 34
2. External Debt 35
Gross external debt down 4.2% y/y to €88.4bn at end-Apr 35
3. Forex Reserves

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report