Political turmoil in Romania causes the hopeful growth of H1 to collapse

The construction works volume index shrank by 0.2% y/y in 2012, turning negative area after the 2.8% y/y growth in 2011. The construction works dynamics recorded encouraging performance in H1, but the activity in the sector weakened abruptly in the second half of the year, affected by the political turmoil in Jul-Aug and further by the government’s decision to cut public funding for infrastructure in the autumn budget adjustment.

The real estate market appear to have stabilised at low levels in 2012. The value of real estate transactions inched up by approximately 6.3% y/y last year, but the total remains below EUR 1bn annual average in the pre-crisis years. Investors and developers maintain cautious as most projects are currently financed through their own resources, yet the retail segment remains dynamic and new schemes continue to emerge.

Learn more from our Intellinews report: Romania Construction and Real Estate Sector

 

Construction industry losing ground in Romania

Construction works volume index grew by 9.1% y/y in Q2 and by 6.8% y/y in H1/2012, according to official statistics. The works for engineering projects surged by 17.1% y/y in Q2 and 18.1% y/y in H1, remaining the sector’s growth driver. Nonetheless, the construction works volume dropped by 4.6% y/y in July, losing ground immediately after the June 10 local elections had driven up the index in Q2. The construction sector’s dynamics and its contribution to the GDP growth are likely to witness abrupt weakening in H2, as the government cut down significantly public funding for infrastructure under the autumn budget adjustment and construction works on large projects, such as motorways and Bucharest underground sections had to be slowed down.

Figure 1 Construction works index in 2007-2012 (2005=100)

 

 

 

 

 

These are only a few of the insights in the new IntelliNews : Romania Construction and Real Estate Report. Learn more and purchase now>>