Romanians more optimist about economic future than other Europeans

Deniza Cristian 01/08/2022 | 13:49

Pessimism about the economic outlook is starting to show in Europe. The latest Eurostat data is showing that the confidence in future positive economic developments is decreasing both in the European Union and the Euro area. But Romanians are more positive about the immediate economic future.

Macro commentary by eToro analyst for Romania, Bogdan Maioreanu


In July 2022, the Economic Sentiment Indicator (ESI) plummeted in both the European Union (-4.2 points to 97.6) and the euro area (-4.5 points to 99.0), falling below its long-term average. The ESI fell markedly in four out of the six largest EU economies, Spain (-5.0), Germany (-4.9), Italy (-3.4) and Poland (-3.2), while it remained broadly stable in France (-0.1) and the Netherlands (+0.2). Romania showed a mild increase of 0.3.

The economic sentiment indicator (ESI) is a composite indicator computed by answers to surveys in industry (weight 40 %), services (30 %), consumers (20 %), retail (5 %) and construction (5 %). Values above 100 indicate above-average economic sentiment and vice versa. Romania is more positive than the EU average with the latest value at 101.2.

In the EU, the drop in the ESI in July was due to significant losses in industry, services, retail trade and consumer confidence, whereas confidence in construction decreased more mildly. For Romania the confidence in the construction sector is below the EU average. We are also seeing a decrease in confidence in the industrial sector, Romania being in the negative territory together with Poland, Czechia, Slovakia, Bulgaria and Slovenia. The overall industrial sector confidence in the EU is decreasing, surveyed managers assessing the current level of overall order books and their production expectations to a 20-months low. Assessments of the stocks of finished products rose markedly, pointing to weakening sales. For the next three months according to the National Statistics Institute, industrial production is expected to remain stable.

While the EU confidence in the Retail sector is decreasing (-1.8), Romania is showing optimism, the index being in the positive territory and showing a 0.7 increase. This is consistent with the Romanian Retailers expectations for the next three months according to the National Statistics Institute. The volume of orders to suppliers of goods by the commercial establishments will increase but the Romanian retail business managers expect retail prices to rise sharply.

Retail employers forecast for the next three months an increase in the number of employees which might prove a challenge. Unemployment data for June, published today, is showing 5.3% which is the lowest level in the last year. At European level the forecast related to employment is deteriorating but still remains in the optimism territory with Romania being above EU average.

But the inflation and fears of recession are starting to decrease consumption, latest data from the EU showing that household real consumption per capita decreased by 0.8% in the first quarter of 2022, after a decrease of the same magnitude in the previous quarter. At the same time, household real income per capita decreased by 0.6% in the first quarter of 2022, after another decrease of 0.6% in the fourth quarter of 2021.

Pessimism concerning economic outlook is not confined to Europe. A surprising data came over the weekend from China where the official NBS Manufacturing PMI for China fell to 49.0 in July 2022 from 50.2 in the previous month showing pessimism about the industrial production growth. The decline came amid sporadic lockdowns following a resurgence of COVID-19 cases in several Chinese cities and growing worries over a darkening global economic outlook due to rapid monetary tightening by central banks.

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Deniza Cristian | 21/12/2023 | 14:13
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