Romania’s industry marks steepest decline in more than a decade

Romania’s industrial production index went down by 7% in September this year compared to the same month of 2018, marking the steepest annual decline seen since May 2009 when the manufacturing sector plunged amid weak external demand, according to data from the Romanian statistics office INS.

September was the third consecutive month when the industrial production posted a negative annual performance.

The weak external demand is the main driver behind local industry’s weak performance, while fading domestic stimulus after the change in political regime might add further downside pressure. Investments in key projects such as Ford’s car plant starting production of a new model in its plant in southern Romania or Turkish Arcelik staring production of washing machine in its EUR 150 mln new plant might compensate part of the downward pressures.

The output generated by the car production industry was 4.9% lower in August than in the same month last year and the performance has not improved in September, according to industry association’s data.

Separately, food industry posts weak performance (-4.5% y/y in August) despite strong domestic demand - illustrating the downsides of strong domestic demand that fails to stimulate local production but rather result in wide trade deficit.

In the first eight months of this year, the industrial production was down 1.6%.

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