The construction works volume index increased by 32.6% y/y in Q1 and by nearly 30% y/y in March alone, the statistics office INS announced.

The sector is likely to have contributed 0.7 pp to the 2.4% year-on-year GDP growth in the quarter, based on the sector’s share in total GDP and a growth of about 20% of the value-added generated this quarter.

Although the residential segment might be negatively impacted by lower consumer confidence, other drivers could underpin positive developments in the coming quarters. Firstly, the government has promised to launch major infrastructure projects, and invest 6% of GDP in such projects over two years. Secondly, the logistic and industrial segments will need extra capacity to accommodate a more substantial role played by Romania as a logistics and manufacturing hub, which is a feasible scenario still to be confirmed. 

The annual increase in the construction sector eased marginally in March, but not by much, to 29.6% y/y. Since works have continued on most construction sites in April, the sector is among those expected to drive the growth this year. Notably, the construction materials industry has posted robust growth as well amid a sluggish overall industrial performance in Q1.

The volume of civil engineering construction work, reflecting the government’s involvement in infrastructure projects, surged by 53.3% y/y in Q1, and its annual growth rate strengthened to 57% in March.

The government’s promise of steady involvement in infrastructure projects supports expectations of further growth in the construction sector.

The volume of work on residential construction projects increased by 21.8% y/y in Q1, while the non-residential segment went up by 17.6%.

Notably, the construction activity is seasonally lower in the first quarter of the year: 14% of the construction works for the full year took place in 2019.