Romania's industrial production (chart) contracted by 5.1% y/y in the 12 months to November 2023, with the core manufacturing industries showing a somehow slower decline of 4.5% y/y.

The annual decline was 4.6% y/y in each of the second and third quarters of the year. It sweetened slightly in October to 2.3% y/y but this doesn’t change the overall picture. 

The government expects industry to bottom out in 2024 and post significant growth rates in the years to come: +3.5% in 2025 and +4.2% in 2026. The value added generated by the sector is expected to advance slightly faster given the shift of industrial structure towards higher value-added industries. 

This remains a scenario supported at this moment only by hopes for large infrastructure projects providing an impetus to horizontal industries. The Recovery and Resilience Facility money and other projects, such as Neptun Deep offshore, are the sole relevant drivers at this moment, when Europe’s economy is not thriving.

The industries that lost ground at a high rate are many, like the reasons behind them: coal mining (decarbonisation), light industry (rising wages), chemistry (expensive natural gas), metallurgy (expensive energy), wood processing (tighter regulations) and even construction materials (decelerating residential real estate development).

Very few industries posted notable growth rates: the automobile industry, manufacturing of electronic and optical devices (partly for the automotive industry), food and beverages (rising domestic demand) and the tobacco industry (the most resilient industry so far).