The industrial output index in Romania contracted by 2.7% y/y in Q1 but improved by 1% q/q (seasonally adjusted) compared to the last quarter of 2023, according to data published by the statistics office INS.

Based on March's robust industrial figures and possibly based on the positive quarterly dynamics, but also considering the above-neutral 51.2 PMI index in April, Erste Research improved its forecast for Romania's industrial production from the already optimistic value of 2.0% to 3.1% y/y. [Erste also quotes unrevised -2.5% y/y industrial dynamics for 2023, whereas the revised growth rate is -3.0% y/y]. 

We believe Erste's +2.0% unrevised forecast was already on the optimistic side, and further positive developments in Romania's trade partners (Germany, mainly) are needed before a positive revision.

In March, Romania's seasonally (and workday) adjusted industrial production index increased by 2.8% y/y overall and 3.7% y/y in the core manufacturing sector. The seasonally (and workday) adjusted index reached the highest post-Covid value.

However, the March industrial figures feature a statistical anomaly - the widest discrepancy between the adjusted and gross annual growth rates: 7.2 percentage points (pp) for the overall index (+2.8% adjusted versus -4.% y/y gross) overall and 8.3pp for the core manufacturing sector. 

In the automobile and electric equipment manufacturing industries, the discrepancy was 16% and 14%, respectively, indicating significantly fewer (nearly 1/6 fewer) working days in March 2024 compared to March 2023. This is not impossible, but it is the widest discrepancy on record and not backed by reports from the country's two automobile manufacturers.

Romania's automobile production contracted by 3% y/y in March, according to the industry association ACAROM, more or less in line with the 0.8% y/y contraction of the gross industrial output index for the sector. The statistics office reports a 15% y/y surge in the seasonally (and workday) adjusted index.

Under the revised Spring Forecast, the Government forecasting body CNP envisages a 1.2% annual advance of the industrial output in 2024, from -3.1% y/y in 2023.

iulian@romania-insider.com

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