Trends in Romania’s Manufacturing Industry
The National Institute of Statistics (INS) has released new data today regarding the evolution of new orders in the manufacturing sector, which includes factories and plants that significantly process raw materials and produce high value-added products. From an increase of 6.4% in June of the previous year, the growth has now dwindled to a mere 0.2%. This figure is largely inflated by orders for machinery and construction, while major declines are observed across most other sectors. Particularly hard-hit are metallurgy and textiles, as highlighted in an analysis.
The manufacturing industry is clearly experiencing a downward trend in new orders, with this indicator having continuously declined month after month since June of last year. From +6.4%, it dropped to +4.1% year-to-date in January 2024. By March, it had already decreased to +1.2%, and it is now on the brink of entering negative territory, following a +0.2% increase in June 2024, according to INS.
Impact on the Metallurgical Industry
Among all manufacturing sectors, the metallurgical industry has suffered the most, reporting a drop of over 17% in new orders for the first half of the year, as stated by INS. Furthermore, the steel industry in Romania has been in continuous decline for the past five years. Beyond the orders, production costs have also risen significantly, primarily due to soaring energy prices. Additionally, the embargo imposed on Russia following its invasion of Ukraine has halted the supply of cheap scrap metal from Russia, further driving up production costs. Recently, the largest producer in the country, Liberty Galați, has sought government assistance to mitigate the industry’s decline.
Textile Industry Challenges
The second most affected manufacturing sector in terms of new orders is textiles, which has seen a 13% decline this year. This industry has also reached out to the government for support, particularly in relation to production costs, with one proposal being a reduction in sector-specific labor taxes.
Additional Declines in Manufacturing
Significant declines have also been recorded in the following areas:
- Manufacturing of electrical equipment: -7.3%
- Manufacturing of electronics: -6.7%
- Durable goods industry: -5.7%
- Consumer goods industry: -5.7%
- Chemical products manufacturing: -2.2%
Growth in Automotive and Construction Sectors
Despite the downturn in many industries, some sectors are experiencing growth. New orders for automobile manufacturers in Romania have increased by 5.9% in the first half of the year, making it the leading sector in terms of growth compared to the first half of 2023. According to data collected by the Romanian Automobile Constructors Association (ACAROM), automobile production in the first six months of 2024 reached a total of 292,378 units, marking an increase of +8.66% compared to the same period last year.
Romanian Automotive Industry Shows Positive Trends in 2023
In 2023, the Romanian automotive sector has demonstrated notable production figures, with Dacia manufacturing 169,998 units and Ford producing 122,380 units. This reflects a revitalization of the industry as it begins to recover from previous challenges.
Record Production in the Previous Year
Last year marked a historic milestone for the automotive industry in Romania, achieving an unprecedented production total of 513,050 units. This surge highlights the sector’s resilience and capacity for growth.
New Orders and Capital Goods Sector Growth
The capital goods sector, which includes construction and property repair, experienced a significant increase in new orders, rising by 4.2%. This growth is indicative of a strengthening economy and a rising demand for infrastructure development.
Industrial and Logistical Market Expansion
The first half of the year has also been promising for the local market of industrial and logistical spaces. The modern stock of industrial spaces has reached 7.3 million square meters, with Bucharest accounting for just under half of this total. Developers are actively constructing approximately 800,000 square meters of modern spaces, expected to be completed in 2024 and 2025.
Infrastructure Developments Accelerating
Infrastructure projects are progressing rapidly, which will open up new areas of interest for the industrial market, particularly in the manufacturing sector. Recent reports indicate that these developments will further enhance the attractiveness of Romania’s industrial landscape.
