The construction works volume in Romania increased by an average of 9.6% per annum (p.a.) over the past six years (as of Q3, 2023), and the sector is frequently seen as a major driver of the country’s economic expansion.

When measured by the gross value added generated, however, the sector’s annualised advance over the past six years is only 2.3% – compared to the 2.9% overall annualised advance of the GDP.

Total gross value added has increased by 3.0% p.a. over the past six years, driven by IT&C (+9.9% p.a.) and real estate activities (+5.4% p.a.). Even the sector of services to households increased its gross value added by 3.3% p.a., more than the average. 

The wide discrepancy between the sharp advance of the construction works volume and the value added generated by the sector advancing much slower may hide the significant increase in the (relative) price of inputs: construction materials and energy. In other words, input prices rise faster than the price of constructors’ output (buildings, civil engineering works). In layman's terms, the construction companies use more expensive inputs but can not pass them to the end-user entirely.

It may also reflect, to some extent, the shift towards less value-added segments of the market, such as civil engineering - compared to residential. 

iulian@romania-insider.com

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