Romania’s Industry Undergoes Sharp Contraction

Despite the projected economic growth, Romania’s industry is sharply contracting. As revealed by BNE, Romania’s industry is the worst performer in the CEE region.

According to the analysis, Romania’s industrial output contracted by 4.8% y/y in the three-month rolling period to January 2023, compared to the same period one year earlier. This was the fourth-weakest performance among the 11 EU members from Central and Southeast Europe analyzed in a report from Eurostat, looking at non-adjusted figures only for the manufacturing industries. 

However, as BNE experts noticed, the contraction comes on top of a comparatively milder 3.4% decline in 2019-2022 during the COVID-19 pandemic crisis, resulting in the weakest overall performance compared to the pre-covid period (-8.3%), among the 11 CEE countries.

Romania is not alone, though. The other country among the 11 to post smaller industrial output in the three months to January compared to the same period in 2019 was Slovakia (-3.6%), while Poland boasted a massive 28.3% advance. 

The journalists from BNE also note that the industrial decline seen over the past four years in Romania dragged the country down from the first group of performers (defined based on the prior growth in 2013-2019), where it was in 2019 alongside Czechia, Poland, Slovakia and Slovenia.

This is not good news for Romania. Translated into a real-life scenario, this industrial decline means that the country produces less and imports more; thus, the trade deficit widens even more. This raises a question: how healthy is the current economic growth Romania experiences each year? While industrial output contributes less to GDP and the country imports more, internal consumption is the real engine behind the GDP growth. And this is not healthy at all.