Winners and losers in the first quarter of decline

Publish date: 15-05-2009
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Before the National Institute of Statistics (INS) releases the official data regarding the evolution of Romania's Gross Domestic Product (GDP) for Q1 2009, one thing is certain: this was the first quarter of economic decline in the past nine years.

The INS is to announce today the exact GDP drop. However, macroeconomic indicators available and data released by real economy players made all economic analysts interviewed by Business Standard to forecast a negative result - between one percent and five percent of the GDP.

In spite of the economic crisis that swept the country in recent months, some sectors registered growth in the first quarter of 2009. The medical service field had the spotlight, with an advance of as much as 30 percent. The express delivery market follows, with a 15-20 percent growth. Other industries with turnover increase were consulting (10 percent), dairy production (10 percent) food retail (5-10 percent) and beer production (5 percent). On the dark side, the household appliance retail and the HR consulting and recruiting plummetted by 30-35 percent, while the auto industry, textiles and IT hardware plunged 30 percent. Other industries, such as the pharmaceutical market, air transportation, meat processing industry and milling and bakery industry were idle year-on-year. From the macroeconomic point of view, the landscape is not bright, but there are signs that the situation could improve later this year. The leu depreciated some 5 percent against the euro, with a RON 4.3119 /€1 historic peak on February 16. It regained ground by the end of March, however. Consumer prices started the year with a gradual increase, but dropped slightly in March, leading the annual inflation rate to 6.71 percent.

On the other hand unemployment registered a significant increase, to 5.6 percent in March, from 4.9 percent in January. For the first time in five years, the number of jobless Romanians exceeded 0.5 million. The current account deficit narrowed in the first two months of 2009 by 75.5 percent, to €614 million, while foreign direct investments climbed to €1.37 billion, compared to €995 million like-to-like. Back to the real economy, the private health market was the first quarter's best performer, maintaining the sustained growth of the previous years. The main companies in the field announced spectacular turnover increase, in spite of the crisis. MedLife posted 73 percent business growth, while Unirea Medical Center advanced 61 percent. The market increase was due to significant investments made in the field, low quality of state health services and the early stage of market development, which only amounts to €350-400 million.

On the other hand, the auto industry fell some 30 percent, in terms of total turnover. Car sales on the European market dropped some 20 percent, while demand in Romania fell as much as 60 percent. Orders for the car part industry also declined by some 30 percent.

Business Standard