Romania’s industrial production keeps shrinking despite mixed January figures

Romania’s industrial production keeps shrinking despite mixed January figures
/ bne IntelliNews
By Iulian Ernst in Bucharest March 15, 2023

The seasonally-adjusted industrial output in Romania picked up by 2.0% m/m  — and by 2.4% m/m for manufacturing — in January, but this doesn’t change the big picture: the country is close to five years of industrial decline.

Compared to January 2022, the gross industrial production contracted by 5.4% y/y (-3.8% y/y for the manufacturing sector), according to data published by the statistics office INS.

It is the third month in a row that industry has posted a negative annual performance and positive figures are increasingly rare and small.

The industries that still post positive growth rates are not many: the manufacturing of food or “computer, electronic and optical devices” (mostly car parts such as cables) are two of them. But even the “road vehicles” (automotive) industry is stagnating despite the buoyant production figures announced by the Dacia and Ford plants.

Romania’s two car factories produced 48,760 units in February, 9.8% more compared to February 2022, according to the Association of Romanian Automobile Manufacturers (ACAROM). Cumulatively, in the first two months of this year, 87,328 units were assembled in Romania, 10% more compared to the same period in 2022. 

It is possible that outsourcing in the automotive industry explains this discrepancy as sectors such as “machinery, not elsewhere classified” have posted significant increases recently – but this is just a hypothesis and in this case, the whole industrial output figure would be significantly altered.

The country’s de-industrialisation is taking place despite multiple grant schemes extended by the government and the European Union. A €300mn scheme for investments in productive capacities was enacted last year (Government decision HG 959/2922) and €150mn was already earmarked for projects, in an attempt to put an end to the process. 

The government, in the latest forecast issued in January, hopes for 0.6% industrial growth (value-added terms) this year followed by more robust growth rates of 4%-5% in the coming years. It is a rather optimistic projection.

Industry, measured by the gross value added generated, has followed roughly the same pattern as the gross output – which means that the structure of products has not shifted to more value-added market segments.