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The Economic Sentiment Index (ESI) fell in May to 99.5 points from 101 points in April
The trust of the managers in the Romanian economy dropped in May for the second month in arrow, due to the deterioration of the data in the industry and services. The indicator, presented by the European Commission dropped under 100 points for the first time after April 2021, level which means a possible contraction of the GDP. ESI is a compound indicator, made on the basis of a survey, which shows the perception of the managers from services (share 30%), industry (40%), constructions (5%) and commerce (5%) as well as of the population (20%) regarding the present state of the economy, as well as the expectations for future evolution. Another element is also important: the indicator is calculated by the European Commission and has a high level of correlation with the evolution of the GDP. A value over 100 points means, in general, an expansion of the economic activity, while a value under this level means contraction.
The economic sentiment index (ESI) dropped in May at 99.5 points, from 101 points in April and 101.8 points in March and reached the lowest level after April 2021.
At EU level, ESI dropped by 1.9 point to 95.2, a fourth month in a row of contraction.
‘After two months of quarter II of 2023, if we rely on ESI we can say that the gradual deceleration of the economy should continue in the second quarter’ writes the BCR analyst Vlad Ionita. In quarter I 2023 the economy slowed down, with a sequential growth of only 0.1% against 1% in the previous quarter, while the annual dynamics got half at 2.3%. Trust in the industry dropped by 1.7 points against April, due to the drop in orders for export and deterioration of the expectations regarding future production.
In the services sector, the indicator dropped by 0.5 points, due to the deterioration of the demand. On the other hand, in the commerce the data improved significantly, by five points, due to the better evaluations with regard to part business.
In the constructions sector the sentiment improved by 2.2 points, due to the increase of orders for works and improved the expectations regarding recruitment. The indicator regarding the intentions for recruitment (EEI) dropped by 0.8 points in May at 107.3 points. BCR expects a slowing down of the economy at 2.1% in 2023, against 4.7% in 2022. The investments would contribute more to the economic growth than in the previous years, where consumption had the main contribution, but now it is burdened by the increase of prices and interests.