Romania’s industrial output contracted by 1.8% y/y in February after the 3.5% y/y fall in January, setting the grounds for a steep contraction in the first quarter of the year, according to data published by the statistics office INS. After three years of steady industrial decline, the premises for a change in dynamics towards an expansionary episode do exist but are fragile: the public investments (that have abounded during the past years of industrial decline) and industrial recovery across Europe, particularly linked to the defence industries that may stimulate (or not) the local industry.

Erste Group remained positive about Romania’s industrial recovery this year.

“We continue to expect 2026 to be the first year of expansion in industrial production following three consecutive years of contraction. [...] However, the recovery is likely to be uneven as energy-intensive industrial sectors are likely to be further affected by higher costs,” according to an Erste Group research note. 

The Austrian financial group admitted the industrial activity will remain contractionary in March, however, based on the BCR Romania Manufacturing PMI, which has improved slightly in the third month of the year, remaining in the negative half of the scale (46.6 points on a 0-100 scale).

In annual terms, the manufacturing industries market in February (just like previously in January) had a decline that was much steeper than the headline figure: -2.8% y/y (-6.2% y/y in January). This was partly offset by the stronger activity in the utilities sector: +4.6% y/y, after +10.6% y/y in January. 

The utility companies’ deliveries to the Republic of Moldova generated supplementary activity. The mining and quarrying remained in the contractionary mode with 3.4% y/y contraction in February (-2.0% y/y in January) – and this is unlikely to radically change until the Neptun Deep offshore project starts production in 2027. 

Notably, the manufacturing industries as a whole marked a positive performance (+0.7% m/m) in February compared to January, in seasonally adjusted terms. 

A limited number of industries posted both monthly and annual advances, and they managed to remain above the activity levels seen in 2021. These are mainly the food and beverages manufacturing (+3.1% y/y and 4.1% y/y respectively, in January-February), but also the pharmaceutical industry (+0.2% y/y), the manufacturing of computer, electronic, and optical products (+3.8% y/y), and transport means other than motor vehicles (+1.2% y/y). 

In contrast, the manufacturing of motor vehicles, with an important contribution to the country’s exports) contracted by 5.9% y/y in January-February and fell under 80% of the 2021 average level in February 2026. The manufacturing of non-metallic mineral products (glass, cement) plunged by 15% y/y and was, in February, more than 5% below the average 2021 level.

iulian@romania-insider.com

(Photo source: Silviu Matei/Dreamstime.com)