Decreased Consumer Confidence in July
Surveys show a lower optimism among consumers and managers in the services sector in July, which could mean a weaker start for the economy in the third quarter. The Economic Sentiment Indicator (ESI) dropped to 102.5 points in July, down from 104.2 points in June, due to a significant deterioration in consumer confidence data, as well as services confidence.
Concerns Over Consumer Spending
Consumer confidence decreased by 4.1 points, with less interest in making significant purchases in the next 12 months compared to the previous survey in June. Household consumption remains strong, supported by solid wage growth and an increase in consumer credit. However, today’s data reveal a weakening of consumer confidence in July, despite the overall positive trend in the indicator since January.
The Economic Outlook for the Second Half of 2024
In July 2024, the economic outlook is much better compared to January – July 2023, according to analyst Eugen Sinca from Banca Comercială Română.
ESI Index and Economic Growth
The ESI Index, calculated by the European Commission based on responses from managers in key sectors of the economy and consumers, is highly correlated with the GDP. A value above 100 points generally indicates economic growth. The ESI Index has increased to 103.8 points in the second quarter, up from 102.4 points in the first quarter.
BCR’s Economic Forecasts
BCR anticipates an acceleration of the economy to 2.6% this year and 3.4% next year, compared to 2.1% in 2023. This indicates positive growth prospects for the Romanian economy.
Industry Confidence
However, in the industry sector, manager confidence has slightly decreased recently, signaling potential challenges ahead. It will be important to monitor this trend closely in the coming months.
Business Confidence in Various Sectors
The business confidence in the services sector has decreased by 0.1 points due to a decline in orders, while production expectations have increased. Managers in the services sector are even less optimistic, with a drop of 1.5 points, as sales have decreased and they expect lower demand in the next three months.
In the retail sector, the indicator has increased by 0.1 points, as managers anticipate better developments in the near future, despite recent sales declines.
The construction sector shows an improvement of 0.6 points in the indicator, with an increase in activity. Gross fixed capital formation is driven by EU-funded investments in infrastructure, which are visible in the construction confidence indicator growth. Private investments in the sector are also contributing to this positive trend.
Positive Economic Indicators in Romania
Sinca notes that residential investments have fallen behind in Romania. The Employment Expectations Indicator (EEI) has increased from 103.7 points to 106.3 points. In the EU, the ESI has increased by 0.1 points to 96.4 points, following improvements in the services and construction sectors.
Growth in the Eurozone
The economy of the Eurozone grew by 0.3% in the second quarter, exceeding expectations according to signal data. However, Germany’s economy contracted by 0.1%.