Slow recovery for Romania
15 July 2011
The Romanian construction industry is recovering slowly from a crash in 2009 and 2010, but while construction output is forecast to stabilise this year, growth is not expected to return before 2012.
According to the latest figures from research company PMR, construction output in the country fell by -15% in 2009, with a similar reduction in 2010, as funding for new development projects dried up.
Declines have continued this year with a -4,7% reduction in construction output between January and April, compared to the same period in 2010. The fall was led by a dramatic -20,8% decline in residential construction output, while output in the civil engineering sector fell by -1,8% over the period.
Non-residential increase
Nevertheless, a +2,2% increase was observed in non-residential construction between January and April 2011 - a subgroup that accounts for over 50% of the total construction market in Romania.
PMR said a recovery in civil engineering is expected to follow once infrastructure development projects, particularly those involving road construction, are resumed.
The struggling residential sector, meanwhile, is expected to be the last to return to growth as the number of residential building permits is still falling.
PMR said growth should return to Romania's overall construction market in 2012 - an election year in the country, during which transport infrastructure projects, and motorway construction in particular, are expected to receive additional funding.
EU funding
PMR also highlighted the fact that substantial amounts of EU funding are available for the development of the country's infrastructure.
"It will take time for the Romanian government to gain the necessary expertise to use the money effectively," PMR added.
"In the medium-to-long term, Romania remains one of the most promising construction markets in Europe. In anticipation of growing demand in the future, producers of building materials, and of cement in particular, have recently been investing heavily in production capacity upgrade projects."
