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Erste Group: Romania’s Economic Sentiment Indicator Stable at the Start of 2024
In the opening month of 2024, Romania’s Economic Sentiment Indicator (ESI) showed marginal stability, inching down slightly to 102.3 compared to December’s reading of 102.4, according to a recent report from Erste Group. The nuanced shifts in sentiment were reflected across various sectors, offering a diverse outlook for the nation’s economic landscape.
Employment Expectations Ease, GDP Eyes a Rebound
The Employment Expectations Indicator (EEI) witnessed a dip to 103.3 in January from December’s 106.1. This aligns with actual employment data indicating a plateau in workforce expansion since last autumn. Despite this, Erste Group projects a rebound in GDP growth, forecasting a rise to 3.3% in 2024 from the 2.1% recorded in 2023. Key drivers for this anticipated growth include robust real wage increases, favorable labor market conditions, and positive spillover effects from past state investments.
Sectoral Insights: Manufacturing, Services, Retail, and Construction
In the manufacturing sector, confidence saw a decline to -0.5 in January compared to December’s -0.3. This downturn was attributed to shrinking production expectations, possibly influenced by weakened domestic demand. Nevertheless, a silver lining emerged with an improvement in export order books in January. The sector’s capacity utilization surged to 71.3%, reflecting a notable increase from October’s 66.5%.
Erste Group maintains a cautious optimism, expecting a modest recovery in manufacturing throughout 2024 after facing challenges in the preceding years.
Services confidence took a hit, dropping to 4.4 in January from December’s 5.4. The
decrease was linked to lower consumer demand in the past and anticipated challenges in the next three months.
On a brighter note, retail trade confidence exhibited improvement, climbing to 11.1 in January from 8.8 in December. Both backward-looking and forward-looking components contributed to this positive shift, indicating a potential boost in consumer activity in the coming months.
Construction sentiment, however, saw a decline, registering -6.6 in January compared to December’s -6.4. This dip raises questions about the sector’s short-term outlook.
Inflationary Pressures Across Sectors
An overarching trend across all sectors surveyed is the rise in selling-price expectations. This suggests growing inflationary pressures, impacting manufacturing, services, retail, and construction.
In conclusion, as Romania navigates the complexities of economic sentiment, Erste Group’s report hints at both challenges and opportunities. While some sectors face headwinds, there is an overall expectation of a measured recovery in 2024, guided by various economic factors and cautious optimism. As the year unfolds, stakeholders will keenly observe how these dynamics shape Romania’s economic trajectory.