Romania’s construction industry remains major economic growth driver

The construction works index accelerated to an annual growth rate of 13.8% in Q3, from 11.0% y/y in Q2, driven by the public works segment (+32% y/y) and certain improvements in the area of non-residential building (+4.9% y/y).

The fiscal constraints will probably dent the overall construction industry performance in Q4, although the multiannual EU budget and the Resilience Facility should keep some worksites busy despite the government’s financial constraints.

The residential building area posted for the second consecutive quarter double-digit contraction (-11.2% y/y), and it keeps bleeding.

The seasonally adjusted construction works index increased impressively by 5.7% y/y in Q3.

Interestingly, the growth in both annual and quarterly terms was driven by new construction works, under the breakdown on the type of works (not the specific destination of the project): +18.7% y/y and +9.1% q/q in Q3.

The construction works index in the 12-month period to September 2023 increased by 15.3% y/y, compared to the 12.9% y/y advance in 2022 and remains a major driver for the entire economy of the country.

The state forecasting body CNP estimates the gross value added generated by the sector to be up 7.8% y/y in 2023 to further accelerate at over 9% y/y in 2025-2026 as the projects under the Resilience Facility have to be commissioned. For 2024, only a small slowdown to 7% y/y is envisaged.

(Photo source: Somporn Suebhait/Dreamstime.com)