Romania’s retail sales index advanced by 7.2% in November 2018 compared to the same month of 2017 (y/y terms), accelerating for the fourth month in a row from 1.5% y/y in August.

For the whole January-November period, retail sales advanced by 6.7% y/y, losing momentum from the 10.7% y/y increase in 2017 and 13.5% y/y increase in 2016.

Nevertheless, the 6.7% average advance of the retail sales in the first eleven months of 2018 is still robust in absolute terms, and it was driven by the rising income, employment and other social benefits paid by the Government. The minimum wage rose again as of January 2019 and the Government promised to observe the wage hike schedule last year, despite scarce resources. But the authorities announced at the same time steps toward curtailing certain benefits and, separately, the consumer confidence is deteriorating amid political turmoil.

Both fiscal consolidation and dropping consumer confidence should depress the private consumption during 2019. The private consumption will decelerate from a real advance of 10% y/y in 2017 to 6.3% y/y in 2018 and 4% y/y in 2019, under the baseline scenario of the largest local lender, Banca Transilvania.

editor@romania-insider.com

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