Romanian companies have announced a string of production and staff cuts together with deadlocked investments in 2008 and early 2009, due to dwindling orders, in the context of deepening financial crisis that swept off the global economic climate.
Romania and the economic crisis

The absence of toxic derivatives for subprime loans – a class of mortgage with a higher default risk – made everybody believe Romania will not be gripped by the crisis that was already unfolding in USA, last summer.

However, as credit bubble was spreading toward the world’s biggest financial centers, the confidence in financial institutions vanished, the lenders not knowing the status of their competitors and thus fearing of a disastrous mass credit default.

Since that moment, the financial deadlock started to spread like wildfire across all Romanian lenders.

Many of them were forced to abort lending procedures for companies; therefore the production and investment expenses were immediately affected.

In this crisis of real economy, exporters are set to take the heaviest losses, as the demand and financing from European Union and United States, Romania’s primary business partners, started to take a nosedive once the crisis spread.

The most affected industry sectors

The most affected fields are car industry, processing and textile industry, construction and wood sectors.

Companies announced massive layoff, reductions in short-term contracts, or temporary layoff, analysts estimating between 100,000 and 400,000 downsized workers.

Chairman of National Association of Importers and Exporters (ANEIR), Mihai Ionescu said he expected between 100,000 and 300,000 axed workers in export production field while the chairman of National Council of Small and Medium-Sized Enterprises (CNIPMMR), Ovidiu Nicolaescu, said many companies in 30 counties had discharged nearly 50,000 workers since early October.

The official statistics finds the first major signs of crisis in the last three months of this year. Thus, industrial output fell 0.7% in October, compared to prior month, and 3% from a year earlier, due to 4.6% decline in processing industry, which could not be wiped out by the advances in other sectors, according to data made public by INS.

Furthermore, turnover of retail industry, excepting car and motorcycle sales slid 19% in October from prior month, which reduced the annual growth pace to 8.6%. Industrial orders fell 3.6% from prior month, due to declines in capital goods and current goods sector, INS informs.
Imports shrunk its growth pace in October, down to 3.6% from a year ago, while exports climbed 13.3%, which reduced the trade deficit by 9% on a monthly basis.

First casualty – real estate industry

Pipeline of real estate deals has started to shrink this summer, given the uncertain international evolution of prices. Thus, in October, companies have put their deals on ice, as the international financial deadlock was doubled by the credit tightening regulations enforced by National Bank of Romania (BNR). On the other hand, the slowdown of prices in construction and land acquisition was very likely after the major expenses in the past five years.

Therefore, companies have put many deals on hold hoping for a recovery of prices, while others started to cut from their profit margins in an effort to conclude sale proceedings. In turn, it had a snowball effect in construction material segment, real estate agencies, furniture and interior decoration producers, and home appliances industry.

Moreover, several companies were forced to abort their expansion plans, due to market deadlock.

Real estate analysts said the prices of old housing units had dropped by roughly 30% since January 1, 2008, and by 5-10% for new apartments, due to the international real estate downturn.

The number of real estate deals fell by 20.8% in October 2008 from a year ago, down to 41.672 units, according to National Institute of Statistics (INS).
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Despre autor este un cotidian de business fondat în 2005, parte a grupului InternetCorp, unul dintre cei mai mari jucători din industria românească de publishing online. Pe parcursul celor peste 15 ani de prezență pe piața media, ne-am propus să fim o sursă de inspirație pentru mediul de business, dar și un canal de educație pentru pentru celelalte categorii de public interesate de zona economico-financiară. În plus, are o experiență de 10 ani în organizarea de evenimente B2B, timp în care a susținut peste 100 de conferințe pe domenii precum Ecommerce, banking, retail, pharma&sănătate sau imobiliare. Astfel, am reușit să avem o acoperire completă - online și offline - pentru tot ce înseamnă business-ul de calitate.

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