Chart of the week: Romania’s industrial production growth decelerates to more sustainable rates

Romania’s industrial output posted a disappointing 0.7% year-on-year advance in January while the annual growth rate in the core manufacturing sector was even slower: a mere 0.1% year-on-year. The modest performance in January comes along gradual slowdown from record 7.8% advance in 2017 to 3.5% in 2018, toward more sustainable growth rates.

Over 2009-2018, Romania’s industrial output increased by an average annual rate of 5% (5.8% in the manufacturing sector), after the 6% contraction caused by the recession in 2008-2009. Romania’s industry relies in no small extent and increasingly on exports, and both the industry and the exports are increasingly dependent on the automotive industry as part of a regional trend. The country’s industry thus remains vulnerable to the activity and consumer confidence in Western Europe, while still having open the option of substituting a larger part of the imports on the local market. The seasonally-adjusted industrial production index declined for the fourth month in a row in January, by 1.5% m/m. However, the index in the manufacturing industries increased by 0.9% m/m, compensating for most of the 1.1% m/m decline in December. Sector-wise, the transport means (car) production maintained a robust growth rate of 8.6% year-on-year in January, while the output of electrical equipment rose as well, by 7.9%. However, light industries contracted by double-digit annual rates while the production of alcoholic drinks and tobacco decreased by 4.9% and 8.5% on a yearly basis as well.