Construction sector stabilization, with uncertain growth prospects

 

The construction sector stabilization, at least in the following months, is also confirmed by the conjuncture studies published by the National Institute of Statistics (INS) and the National Bank of Romania (BNR), according to which the sector production will stagnate, along with a slight drop of contracts and orders stocks. At the same time, construction companies’ general managers interrogated by the two institutions forecast a moderate drop in the number of sector employees and a slight price rise. Overall, the construction sector activity varies according to the crisis impact on the economy and is influenced by any decision made by the government or set at a European level. Thus, the fragile and variable economic climate, corroborated with the national legislation modifications, the European regulations, the fluctuations of demand and raw material prices explain the increasing number of market incidents in the last three years. Moreover, macroeconomic problem specialists consider that the Romanian economy has minimum chances of reaching 4%-5% growth rates in the following years, and against this background the government will have to adopt measures able to support local companies. Also, economics experts recommends central authorities to offer facilities to the business environment (mainly for exporter companies) and create a stronger commercial bank, with exclusively local capital, at the same time encouraging a slightly nationalist economy, applied at all levels.

The year 2011 represented a difficult period for the construction sector companies, considering that annual statistic data indicates a slight 1.1% growth in the volume of specific works, as adjusted series - according to the number of working days and the seasonal factor. Companies’ financial problems are significant if we consider that at the end of last year 3,548 sector companies were in various stages of the insolvency procedure, according to some information published by the risk management company - Coface Romania. Thus, the construction sector, along with trade, is in the top chart of sectors facing serious financial difficulties, representing overall more than half of the total insolvencies recorded in 2011. During the last years, the sector market was defined by a constant increase in the number of companies facing payment incapacity, their number being twice as high in 2011 as the level recorded in 2008, with 1,666 insolvency cases.

The national production of construction materials grew by 12% in the first 11 months of last year, as against the similar period of 2010, according to some information provided by the Association of Producers of Construction Materials in Romania (APMCR). At the same time, the indicator related to November 2011 reveals a 14.8% growth as against the level recorded in the same period of the previous year and a 12.9% drop as against the previous months, following the start of the cold season. Also, the value indicators of the total turnover of construction material producers in our country grew between January - November 2011 by 16.6% as against the first 11 months of 2010. At the end of November 2011, the construction sector benefited from 325,900 workers, out of which 34,200 were employed in the construction material sector. As regards the specific products export, in the first ten months of last year, international deliveries of EUR 245.4 million were recorded, while imports totalled EUR 670.2 million. If we analyze the main product groups, plaster, concrete and lime exports totalled EUR 33.2 million in the reference timeframe, and imports totalled EUR 124.9 million. The value of plates of clay sold abroad amounted to EUR 95.1 million in the reference period, and the value of imported plates of clay totalled EUR 191 million. According to the APMCR information, in November the market average wages were RON 1,224 (respectively, RON 1,573 in the material manufacturers sector). Overall, this year the Romanian construction material market will maintain the level recorded in 2011, namely approximately EUR 3.5 billion, according to the same source. "The specific sector will rank at most at the level of last year, considering that the economic growth forecasts are negatively reviewed each month by the international financial institutions", as stated by Claudiu Georgescu, the APMCR President. The main sector trend for 2012 will be represented by the promotion initiatives for the use of ecological construction products.