Romania Construction and Real Estate

The annual performance of the construction sector slipped in the negative area in March (minus 6% y/y) and remained in the same region meanwhile. Thus, the volume of construction works shrank by 16% y/y in April and further by 25% y/y and 4.4% y/y in May and June respectively. The construction works index dropped by 17.4% y/y and 9.9% m/m in July, according to the latest data available. Notably, the volume of constructions remained in each of the past months above the level reached in the same month of 2007. In other words, the constructors have not lost more ground than they gained last year. The average activity in themonths since the first annual denative performance remains 58% above the average monthly activity in the base year 2005. Based on the much steeper shrinkage in financing availability, one can infer further contraction of construction activity in the coming quarters.
The value added generated by constructions marked the first negative performance with a 14.2% y/y decline in Q2, after above-30% y/y growth rates until mid last year.