Romanian industry close to best post-recession performance

Romanian industry close to best post-recession performance
By Iulian Ernst in Bucharest January 12, 2018

Romania’s industrial production index increased by 9.2% y/y in November, and production during the January-November period advanced by 8.3% y/y, the statistics office reported on January 12.

Industrial growth possibly hit the highest level in the past decade in 2017 (depending on the performance in December). So far, the best performance was posted in 2013 (+7.9%). 

Both the gross production index and the value added generated by industry expanded by 7%-8% in each of the first three quarters of 2017 and the contribution of industry to the overall GDP y/y growth was surprisingly robust: 1.5pp in Q1 and 1.8pp in each of Q2 and Q3. The contribution reported in Q2-Q3 last year was thus the most significant since 2006, before the 2008/2009 recession hit the country.

Industrial output in the rolling 12 months ending November increased by 7.9% y/y, which was the highest performance since September 2014 according to bne Intellinews calculations. Under this metric, the industry has performed better during several episodes over the past decades, with the last time being in 2014.

Industry’s robust performance in 2017 was driven by the manufacturing industries, with an average increase of production of 9.0% y/y in January-November (versus 8.3% y/y average). Among the key industries, the production of electric equipment expanded by 29% y/y and the production of transport vehicles increased by 16% y/y in the period. The production of electronic and optical equipment (another key industry measured by its share in total value added generated) increased by 7.3% y/y. Some major manufacturing industries have posted modest performances: food production (+1.2%), crude oil refining (+1.2%) or metallurgy (+5.6) but very few posted negative growth rates. Notably, wood processing marked a negative growth rate (-6%) possibly as a result of tighter regulations in regard to forest exploitation.