Chart of the week: Romania’s construction market rallies, but is not out of the woods

Romania’s construction market posted an impressive 12.5% year-on-year in Q1 this year, driven by massive 27.4% advance of the residential buildings segment. The broader perspective shows the performance has not occurred with a predictable upward pattern and the activity level is rather recovering after severe contraction over the past years.

The index lost 13.4% over the past three years, dragged down by the government cutting as much as possible the capital expenditures to create room for higher public payroll and social security expenditures while not making use of the EU funds to compensate for this. An average 12% growth this year would only bring the construction works index in line with the post-crisis average level seen in 2011-2013, which was still nearly 15% below the average volume of construction works performed in 2007-2008 before the crisis.