Romania's industrial production index increased by 3.1% YoY in July, losing momentum from the outstanding (and low-base driven) 12% YoY growth in June and 29% YoY surge in May.

The industry has visibly recovered from last year's crisis, but in terms of gross industrial output, it still lags behind the pre-crisis levels: its production was still 3.6% smaller in July this year, compared to July 2019. But this is no surprise as the industrial slowdown became visible in 2018, and the industrial growth turned negative in 2019 - well before the crisis.

The industrial decline in 2018-2019 was sometimes seen on a positive note as a shift to higher value-added sectors much needed in order to support the higher wages prompted by a tight labour market.

The narrative of re-industrialising the country in the context of new production chains (less vulnerable to global disruptions) has been circulated since the lockdown period, but except for the expansion of logistics real estate developments (and local production of face masks), nothing supports it so far. On the opposite, Dacia's first electric car is going to be Made in China.

In related news, the statistics office INS announced that the industrial turnover surged by 13.6% YoY in July. The double-digit growth comes after much higher figures in the previous months (the advance for the whole January-July period was 24% YoY), and it is explained by the substantial increase in industrial prices.

For January-July, the industrial output advanced by 14% YoY while the industrial turnover soared by 24%. The 10pp spread, standing for the rise in industrial prices, remained intact for July as well. 

andrei@romania-insider.com

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