Energy, cement and beer to measure the economy

Albeit delayed and with a significant margin for error, the evolution of gross domestic product (GDP), the unemployment rate, the speed of lending, or the price of homes indicate how Romania has been hit by the recession. But in order to know what is happening on a daily basis and to make forecasts, economists also look at more specific indicators, related to consumer behavior.

For some time now, President Traian Basescu said that he was only interested in energy consumption, which is meant to indicate when this industry will rebound. This is just one of the indexes that can reveal what is happening in the Romanian economy. Cement consumption shows what we can expect in the construction sector. Beer sales are likewise representative of consumer confidence in the economy. On the other hand, some indicators continue to rise even in times of crisis, such as cosmetics or chocolate, which seem to serve as anti-depressives. "There are measurements that can be used as an indicator by which we see demand. Energy, beer, and cement are considered by analysts as a good proxy for GDP," Matei Paun, Managing Partner of BAC Investment Bank, told Business Standard, adding that the relevance of the three sectors is also given by the fact that they are not part of the gray economy.

"I agree that one can see the state of the economy by looking at energy consumption, but I believe that before beer and cement, we should consider the consumption of basic products," Maria Grapini, President of the Light Industry Owners Federation.

The industry most affected by the decline in demand is cement. After four years of growth, cement sales began dropping in 2009, and posted a 30 percent decline in the first six months, mainly due to the downturn on the real estate market, according to data provided by the Cement Producer Employers Association.

Electricity consumption also registered sharp declines in the first eight months of this year, with a 10 percent drop at the national level, considering a significant slowdown in exports, according to Octavian Lohan, Deputy General Manager of Transelectrica. One of the most dynamic markets in the past few years was that of beer, with growth rates of some 20 percent, which raised the interest of large international producers who not only came to Romania but also made significant investments. The decline was 10 percent in the first half of 2009, due to lower Romanian purchasing power, and to a change in consumer habits, according to representatives of the "Brewers of Romania" Association. Forecasts for the near future are not at all optimistic, as estimates put forward declines of 20 percent for the whole of 2009, compared to a 4.1 percent growth rate registered in 2008. Vifor Versescu, General Manager of the Employers Association in the Beer Industry, said that sales dropped 17 percent in the first eight months, far below the expectations of producers.

standard.money.ro