Romania's forecasting body estimates industrial output contracted by 3.6% y/y in Q1

Romania's industrial sector recorded a marked deterioration in the first quarter of 2025, with key performance indicators reflecting continued contraction due to global demand uncertainty and geopolitical tensions, according to the latest economic survey by the National Strategy and Forecasting Commission (CNSP).

The contraction in activity was observed across all economic indicators tracked by the commission, including industrial production, turnover volume, and inventory levels.

Industrial production is estimated to have declined by 3.6% year-on-year, reversing the slight recovery seen in the fourth quarter of 2024, when the sector posted a 0.4% annual increase.

Official data published by the Statistics Office INS show a 0.8% y/y decline in January. The downturn follows a broader negative trend, with a 1.6% contraction registered for the full year 2024.

A significant decline in deflated turnover is estimated for Q1 (-1.4% y/y), particularly in foreign market sales (-2.6% y/y), as domestic and external demand remains weak. Finished product inventories are also expected to fall (-8.6% y/y), pointing to an adjustment of production volumes to reflect reduced market demand.

The CNSP warned that the sector's short-term prospects hinge on its capacity to manage operational costs, match production levels to subdued demand, and seize external market opportunities within an unstable macroeconomic environment.

CNSP analysts noted that Romania's industrial activity is likely to remain under pressure throughout 2025, with diminishing labor productivity expected as a direct consequence of shrinking output.

"In the short term, the performance of the industrial sector will depend on its ability to manage costs, maintain the balance between production and demand, and capitalize on opportunities in the foreign market in a still uncertain macroeconomic climate," the commission stated in its report.

(Photo source: Arlawka Aungtun/Dreamstime.com)