Lower energy, commodity prices not visible in Romania’s industrial output yet

Lower energy, commodity prices not visible in Romania’s industrial output yet
/ bne IntelliNews
By bne IntelliNews April 18, 2023

The lower energy and commodity prices that have already surfaced in the foreign trade numbers, resulting in a smaller trade deficit in the first months of the year, have not propped up Romania’s industrial activity yet, according to the February figures published by the statistics office INS. 

In seasonally adjusted terms, the country’s industrial output remained at the same levels as in the second half of last year, while falling in annual terms. 

The high gas and commodity prices forced many industries to reduce or suspend activity last year, when the overall industrial output dropped by 2.7% y/y (-1.1% y/y for manufacturing) in H2.

The industrial output in the first two months of 2023 contracted by 5% y/y (-3.9% y/y for the manufacturing sector) as a result of base effects. But it remained in line with if not above the values seen during H2 last year.

The sectors worst hit by the war in Ukraine were metallurgy (nearly -40% y/y), wood processing (except for furniture) by nearly 30% y/y and chemicals by over -20% y/y.

The wood processing industry was partly using raw materials from Ukraine, while metallurgy and chemicals couldn’t cope with the scarce and expensive natural gas supply.

Production of motor vehicles increased by 8.7% y/y, though, while the production of electronic and optical parts and devices surged by 14.8% y/y.

In the regional medium-term context, Romania’s industry posted among the weakest performances, besides those of Slovakia and Croatia, remaining only some 10% above the average level of 2015.

Poland and Lithuania are leading with advances of around 50% versus 2015. 

At the same time, however, Romania’s share of manufacturing in total GDP (19.2%) is among the highest in Central and Eastern Europe, surpassed only by those boasted by the Czech Republic (21.2%) and Slovakia (19.5%).