Top macroeconomic indicators of Romania

Romania’s economy is experiencing a severe recession and despite the signs that the worldwide crisis was drawing to a close, the country registered a deep contraction. Wall-Street lists the top 12 most important macroeconomic indicators to gage first-half economic activity.

Imports � 17.9 bn euros (-36.6%)

The country’s imports contracted by 36.6% in the six months through June this year, down to 17.903 billion euros.

The key drivers behind the sharp decline were the devaluation of the local currency against euro as well as the reduction of imported goods demand.

Exports � 13.5 billion euros (-20.3%)

Romania’s exports dropped 20.3% year-on-year in the first half of 2009, down to 13.562 billion euros.

The country’s trade gap narrowed to 4.34 billion euros in H1 2009, down 6.858 billion euros from a year earlier.

Foreign direct investments � 2.89 billion euros (-43%)

FDI inflow fell sharply in the first six months this year, by 42.98% to 2.894 billion euros as compared to 5.076 bn euros in prior-year period.

The drastic decline in FDI flowing into Romania was largely due to a reduction of foreign investors’ confidence in the country’s economic performance, after two rating agency have cut the nation’s rating to junk or non-investment grade.

In the first half this year, foreign direct investments of non-residents in Romania have fully financed the current account gap.

Current account gap � 2.37 billion euros (-73.3%)

In H1 this year, the current account of the payment balance registered a deficit of 2.375 billion euros. However, the CA gap narrowed by 73.3% from prior-year period, more than analysts had expected.

Before crisis erupted, the CA deficit was the economy’s no 1 threat as it was nearing 14% share of GDP. At the end of first quarter this year, it hardly exceeded 2% of GDP.

Budget gap � 3.4 bn euros (-2.9% of GDP)

The consolidated budget deficit made 3.4 billion euros in the first quarter, accounting for 2.9% of the Gross Domestic Product estimated at 117.27 billion euros.

The latter IMF projections show a 7.3% weight of budget gap in the country’s this year GDP.

Public debt � 43 billion euros (+25%)

Romania’s pubic debt load increased by 25% in the six months through June, up to 43.44 bn euros compared to 34.76 bn euros in the same period in 2008.

The amount includes both internal and foreign public debt as well as the IMF-led rescue package.

The government debt increased sharply over the past year, in order to fill the budget gap.

Exchange rates � 15.45% up YoY

The local currency has significantly lost ground to euro over the past 12 months, the EUR/RON exchange rates growing 15.45% up to 4,2067 lei/euro.

The highest level of the exchange rates of the period under review was hit in January 22, when National Bank of Romania posted a benchmark rate of 4.3127 lei/euro.

Industrial output - 10.8%

Industrial output shrank 10.8% in the first half, compared to the same period of last year. In 2008, Jan-Jun statistics showed a 5.9% advance YoY in industrial output.

Industry is one of the most important branches of the economy, and analysts say the sector will be the first to show signs of improvement.

Inflation - 5.06% in July

Annual inflation rate dropped in July to 5.06%, in line with analysts’ forecasts while compared to June, consumer prices fell 0.07% on lower food prices and flat prices for non-food products and services.

Romania recorded the highest annual inflation rate in European Union, as the EU’s inflation rate stood at 0.2%. In June, the annual inflation rate was 5.86%.

Jobless rate � 6.3% in July

Unemployment rate reached 6.3% at the end of July, up 2.7% from a year earlier, and 0.3% higher than a month earlier.

The number of jobless stood at 572,562 at the end of July after adding 24,000 in one month only.

Average earnings - 325 euros

First-half statistics show the median monthly pay for full time employees in Romania amounted to 325 euros (1,376 lei). The full time occupations with the highest earnings in first half was in financial broking (except insurance and pension funds), and the lowest-paid of all full-time employees were those in hotels and restaurants.

Compared to first half last year, when the average earnings was 333 euros (1,221 lei), the monthly pay fell 2.2% when expressed in euro, due to the devaluation of the leu against the single European currency.

Gross Domestic Product � down 7.6% in H1

Romania’s economy contracted by 7.6% YoY in first half, compared to a year earlier, when the country’s economic performance was still in the positive territory (+8.8%).

For this year, the Ministry of Finance expects the Gross Domestic Product to stay in the range of 117.27 bn euros. For 2010, forecasts indicate a moderate growth of 0.5%-1%.