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Erste improves the estimates regarding the evolution of the Romanian economy in Q2 2020
The Romanian economy would record a decline of 10.8% in Q2 2020 as compared to the previous three months, against a drop of 15.2% estimated previously, after the publication of some recent data which surpass the estimates, an analysis of the Austrian banking group Erste quoted by Ziarul Financiar says.
In June, retail sales have increased by 6.3% against the previous month, and by 0.9% against the similar period of 2019. The first summer months has brought a solid recovery of sale of non- food products (8.1%) and sales of auto fuel (16.4%) following the lifting of the majority of mobility restrictions and business restrictions. In June the malls have reopened in Romania.
The short term perspectives for retail sales will be probably shaped by the evolution of the crisis produced by coronavirus pandemics (COVID-19) and the restrictions of mobility that came next.
July brought a significant growth of the number of new cases of COVID-19 and the local authorities announced new restrictions in some regions in Romania at the beginning of August. Although these restrictions do not seem severe and are connected mainly to the sector of services ( strict rules regarding the operation of bars, restaurants and gaming industry at night) the recovery of the economy seems unequal.
The retail indicator of the Indicator of trust in economy continued its growing trend in July, although in a slower rhythm against the previous months. The present situation is evaluated as being better by the managers in the retail sector, although a worsening of the business conditions was estimated for July, after significant improvements in May and June. On medium term, the key risks at the address of the retail sales are connected to potential fiscal consolidation measures after general elections which will probably affect the real income available for households in Romania.
Among the rapid models of Erste regarding the growth of economy, the model which regards the offer suggests the most significant decline of the GDP in Q2 2020, of 12.4% as compared to the previous three months, due to the manufacturing industry and the severe decline of services.
The industrial production has increased in May, but according to Erste a complete recovery of production would last up to eight quarters. In case of the model regarding demand, the GDP decline would be smaller, of 11.4% between April – June 2020, as compared to Q1 2020, following the quicker recovery of domestic demand.
On the other hand, foreign demand will continue to act probably as a braking element, due to interruptions in the delivery chains, although there is proof that there is gradual recovery abroad.
The Erste model based on flexible indicators shows a drop of 8.5% of the economy in Q2 2020, as compared to the previous three months, and a slowing down of the recovery rhythm in Q3 2020.
As a result,Erste keeps unchanged the estimate for this year, which indicates a decline of GDP of 4.7%.