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Ford drives hike in car production in Romania
1 day ago
Visitors to the Eurovision song contest in May pushed up retail sales figure in the first half of this year, but big jumps in real income suggest that consumption will continue to rise over the rest of the year.
Growth in retail trade turnover was up 7.3% y/y in 1H17 from 7.1% y/y in 5M17, while monthly growth slowed to 9.0% y/y in June from 10.7% in May, as the song contest effect faded.
Still, after collapsing in 2015-16 retail turnover is clearly now recovering driven by improving consumer confidence and growing household income.
The consumer confidence index stood at 59.4 in June (on 0-200 scale), its highest level in almost three years, recovering from a record low of 41 in early 2015, reports Dragon Capital.
A government decision to double the minimum salary from the start of 2017 drove the growth in household income , which were up +2.8% y/y in 1Q17. State budget-related sectors in particular did well from the increase and pushed the official real salary up by 20% y/y in May.
Dragon Capital expects domestic demand will support economic growth this year, helping offset the negative impact of severed economic ties with Donbas. Dragon forecasts real GDP growth at 2.2% y/y in 2017 and 3.3% in 2018, driven predominantly by domestic demand.
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