Romania's industrial output has recovered, in general terms, to the pre-crisis levels after the plunge taken during the lockdown, and it is now converging to a sub-optimal functioning under constraints and limitations that are prevailing across global production chains during the current period.

In February, the industrial output index was 3.1% lower than in February 2020 - just before the lockdown period entered into force in March. The contraction was slightly more substantial (-4.2% y/y) for the core manufacturing sector.

Over a longer period (rolling 6-month average as of February 2020), Romania's industry performed roughly at par in February 2021, both overall and in the core manufacturing sector.

The post-crisis pattern is shaped by volatility, and the seasonally adjusted index reflects this: it dropped by 1.0% month-on-month in February after it had increased in the previous two months by a combined 1.5%.

While the vaccination across developed economies provides guarantees for smoother functioning of the industry (including Romania's), the realization of the significant growth potential depends not only on successful vaccination campaigns but also on the stimulus packages' operationalization.

Particularly, the European Union's Recovery and Resilience Plan is critical for the resumption of investments and production, and the first steps are expected at best no sooner than this fall with significant risks related to the approval of the supplementary financing by national legislators. 

iulian@romania-insider.com

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