News

Daily Newsletter - 23 March 2023

Summary

Macroeconomic (4)
Financial (2)
Investment (4)
Legislative (4)
European News (1)
Social (2)
Macroeconomic 
Romanian economy will stagnate in 2023
Romanian economy will stagnate this year, amid concerns about uncertainties related to macroeconomic conditions, according to the findings of the fifth edition of the Moneycorp Barometer on the State of Romanian Economy. 32% of surveyed managers expect economic stagnation in 2023, while another 28% see marginal economic growth. An identical percentage, 28%, see a mild recession this year, while 12% of executives are pessimistic and expect severe economic downturn in 2023.
Countries in Central and Eastern Europe record the biggest price increases
Countries in Central and Eastern Europe record the highest inflation rates, with price rises ranging from over 15% in Slovakia and Romania to 55% in Turkey, a country that has been struggling with this problem since before it became a widespread disease for almost everyone. By comparison, the average inflation rate across all EU countries was 9.9% in February 2023, while in the euro area it fell to 8.5%. So while this is a general problem across Europe, the pace of price increases differs considerably between West and East.
Turnover from market services mainly provided to enterprises grew by 19.4% in January 2023
Turnover from market services mainly provided to enterprises grew in nominal terms in January 2023 year-on-year, by 19.4% as a gross series, and by 21.9% as a working-day and seasonally adjusted series, according to data published by the National Statistical Institute (INS) on Wednesday, 22 March. Turnover from market services mainly provided to enterprises, as a working-day and seasonally adjusted series, rose 0.7% in nominal terms in January 2023 compared with the previous month.
Wholesale trade turnover grew by 11% in January
Wholesale trade turnover (except for trade in motor vehicles and motorcycles) grew in nominal terms in January 2023 year-on-year, by 11% as a gross series, and by 16.4% as a working-day and seasonally adjusted series, according to data published by the National Statistical Institute (INS) on Wednesday, 22 March. Wholesale trade turnover (except for trade in motor vehicles and motorcycles), as a gross series, decreased by 12.5% in January 2023, compared with the previous month.
Financial 
UniCredit Bank wants to reinvest RON 845 million to increase capital and solvency
UniCredit Bank Romania, controlled by the Italian group bearing the same name, has decided that it will not offer dividends to shareholders for the 2022 tax year, and that nearly RON 845 million of last year’s profit, of RON 879.2 million, will be reinvested to increase capital and solvency, and RON 34.2 million will go to reserves. This decision by UniCredit Bank Romania’s management will be discussed by the bank’s shareholders during a General Meeting of Shareholders scheduled for March 2023.
Fintech iBanFirst carried out over €700 million transactions for Romanian companies in 2022
Fintech iBanFirst carried out over EUR 700 million transactions for Romanian companies in 2022, according to a press release. This year, amid the growing demand for digital financial services and currency risk hedging solutions, the company aims at a double volume of transactions, above the threshold of EUR 1 billion. iBanFirst recorded a 300% increase in the number of Romanian companies using the platform in 2022, having currently reached 330 clients.
Investment 
Two new wood composite profile factories will be built in Romania
Two new wood composite profile factories will be built in Romania, in two different localities, following over RON 15 million investments. After having invested EUR 2 million in doubling the production capacity of its plant in Buzau, Bencomp, the biggest wood composite profiles manufacturer in Romania, will invest in a new plant in Arad in 2023. The value of the investment in the new wood flour and briquettes plant has been estimated at RON 10,010,766 (over EUR 2 million).
Portuguese company BA Glass is to invest over EUR 1 billion in its 12 plants
Portuguese company BA Glass is to invest over EUR 1 billion in its 12 plants over the next five years, including EUR 150 million in Romania, according to data published by the State Agency for Investments and Foreign Trade. The investment plans in Romania involve two new latest generation furnaces in Bucharest and a 25,000 square metre warehouse, Rador reports. BA Glass is the biggest glass packaging manufacturer in Portugal. Formerly known as Barbosa & Almeida, it is now the only glass packaging manufacturer in Romania, producing around two million bottles a day and aiming, following its new investments, to double its production capacity within the next three years.
Real estate developer Nusco Imobiliara has started construction works on Nusco Homes
Real estate developer Nusco Imobiliara has started construction works on Nusco Homes, a new complex of villas in the north of Bucharest, in the green area of the town of Tunari, an investment estimated at over EUR 30 million. The project is being developed on a plot of land of over 50.000 square meters. Nusco Homes will host 121 villas of six types and will be developed in two phases. The first phase, with 52 villas, will be finalized by Q2/2024 and the entire project will be ready for delivery at the end of 2025.
Holde Agri Invest has bought a new farm in Dâmbovița County
Holde Agri Invest, a Romanian company that operates agricultural land, has bought a new farm in Dâmbovița County, according to a press release. The farm has an area of about 980 hectares of land and will be integrated into Holde’s Conțești nucleus. According to the press release, the value of the transaction amounts to EUR 2 million, of which Holde has paid about EUR 1.2 million from its own sources, with the remainder to be paid by the end of this year in several instalments. The land on the farm is operated on a leasehold basis and the transaction value includes both the farm’s own agricultural base and the machinery fleet that will be integrated into the Conțești nucleus.
Legislative 
Draft on the temporary freezing of RCA rates at the level of 1 March 2022 has been published
On Wednesday, 22 March, the Ministry of Finance put up for public consultation the draft Government Decree stipulating that insurers selling mandatory civil liability car insurance (RCA) policies shall charge the rates valid on 1 March 2022. The document stipulates that if the policy rates charged by RCA insurers on 1 March 2022 are higher than those charged on 1 March 2023, RCA insurers shall apply the lower of the two rates.
Government has adopted a decision on decarbonisation measures
Minister of Investments and European Projects Marcel Bolos said, at the end of the government meeting that a decision on decarbonisation measures had been adopted so that this milestone of the National Recovery and Resilience Plan (PNRR) can be validated by the European Commission. Another milestone for which measures have already been taken by Parliament is the one regarding whistleblowers. Minister Bolos also said that other milestones included in payment request number 2 were related to the energy sector, but also to the Ministry of Development, on the seismic risk infrastructure component, for which the Government is ready to provide the necessary information and documents so that those PNRR milestones should be validated.
Government adopted an OUG to finance the construction of three medical centers
The Government adopted on Wednesday, 22 March, the Emergency Ordinance (OUG) on the financing of activities included in the Loan Agreement (Health Sector Reform Project - Improving the Healthcare System’s Quality and Efficiency) between Romania and the International Bank for Reconstruction and Development, signed in Bucharest on 17 June 2014 and in the Loan Agreement (Additional Financing for the Health Sector Reform Project - Improving the Healthcare System’s Quality and Efficiency) between Romania and the International Bank for Reconstruction and Development, signed in Bucharest on 11 June 2021. The normative act provides for the allocation of RON 343 million from the state budget.
On 22 March, Government adopted a decision repealing Government Decision 1573/2022
On Wednesday, 22 March, the Government adopted a decision repealing Government Decision 1573/2022 approving the postponement of the closing of certain lignite-fired power capacities and related mining operations. The repeal of Government Decision 1573/2022 is a consequence of the amendments brought to Government Emergency Ordinance 108/2022 on the decarbonisation of the energy sector.
European News 
EU requested pension reform causes Romania headaches
Just a few days after Romanian authorities asserted that the second payment of the national recovery and resilience plan would be granted, the debate over a major milestone in the third payment has already heated up. Romania has committed to reforming the so-called special service pensions through the recovery plan. These are pensions granted to certain professional categories such as judges, prosecutors, military, police and secret service employees, some of which are even ten times higher than the average pension in the country. The trouble with special pensions is that they are not based on the contributory principle and are considered a burden on the state budget. The PNL-PSD governing coalition promised to make a pension reform to eliminate inequalities, as requested by the European Commission.
Social 
Six out of ten companies say they have allocated a budget for salary increases in 2023
Increasing salaries continues to be among employers’ priorities in 2023. Six out of ten companies say they have allocated a budget for salary increases for this year, while 73.7% adopted this measure last year as well, according to the latest survey conducted by eJobs Romania. A quarter of respondents in the survey said salaries would not grow by more than 5% this year, while 37.5% have planned 5-10% increases compared to last year. 20.8% announced increases of 10% to 20% and 12.5% said that pay rises would be adjusted to inflation.
Reducing and preventing school drop-out are a priority for the National Liberal Party
The National Liberal Party announced on Wednesday, 22 March that reducing and preventing school dropout was one of the party’s priorities, and EUR 265 million would be allocated in the following period to prevent and reduce school dropout in secondary education. To this end, the Ministry of Education has put up for public consultation the Applicants’ Guidelines corresponding to the call for projects "PNRAS Grant Scheme - Round II", financed through the National Recovery and Resilience Plan.