News

Daily Newsletter - 1 August 2022

Summary

Macroeconomic (4)
Financial (3)
Investment (3)
Legislative (2)
European News (1)
Social (3)
Macroeconomic 
Romania is among top 15 countries in the world in terms of estimated GDP/capita growth rate
Romania is among the top 15 countries in the world in terms of estimated GDP/capita growth rate until 2030, according to an analysis conducted by the prestigious Harvard University. GDP per capita growth rate will be around 3.5% per year, the 12th highest in the world. The evolution of this indicator during the period 2020 and 2030 can be explained through several factors, the most important of which are the growing economic complexity and the decrease in Romania’s population.
State revenues have grown by 23% in 2022
The situation of the Romanian state’s finances is good at mid-2022, considering that revenues grew by 23% and spending only increased by 14%, according to financial analysts. This is a good result, as the budget deficit was 1.7% of GDP (RON 23 billion) compared with 2.9% of GDP in the same period of 2021. The government says the deficit will be 5.84% of GDP by the end of 2022, but economists expect a higher level. Even on the government’s estimate, at least another RON 57 billion will add to the deficit in the following months. State revenues grew by a total of 23%, to RON 217 billion.
Economic sentiment in Romania improved in July 2022
Economic sentiment in Romania improved in July 2022, according to the Economic Sentiment Indicator published by the European Commission on a monthly basis. However, confidence in the euro area economy decreased, as per the same survey. Andrei Rădulescu, Macroeconomic Analysis Director at Banca Transilvania, has stated that the figures show that Romania can benefit from the war in Ukraine. Moreover, he has added, this outlook is also supported by the increase in foreign direct investments by more than 50% year-on-year, to EUR 3.8 billion, in the first five months of 2022.
Euro area economic growth accelerated to 0.7% in Q2/2022
Euro area economic growth accelerated in Q2/2022 compared with the previous quarter, according to Eurostat preliminary data published on Friday, 29 July, defying estimates of a slowdown, thanks to a much better-than-expected performance in Spain, France and Italy. Eurostat’s flash estimate could be subsequently revised, but it shows the resilience of the economy of the 19 countries that share the euro amid record inflation, especially energy costs for industry, and the uncertainty created by the Russian invasion of Ukraine. The euro area’s Gross Domestic Product grew by 0.7% quarter-on-quarter during the period April-June, and by 4.0% year-on-year.
Financial 
Interest rate on ten-year government bonds has been adjusted to 8.1%
The evolution of national economy, international macro-financial developments and the regional geopolitical context led to the adjustment of the interest rate on ten-year government securities to 8.1% in the last week of July, from a peak of 9.1% reached in June. The current interest rate is nevertheless 58% above the level recorded at the beginning of 2022, according to an analysis made by Andrei Rădulescu, Macroeconomic Analysis Director at Banca Transilvania. Ten-year bonds, the barometer for the cost of financing in economy, had reached an interest rate of 9.1% per year at mid-June.
Over 10,000 Romanians with First Home loans have requested to switch from ROBOR to IRCC
More than 10,000 Romanians with First Home or New Home loans, affected by the rising borrowing costs, have requested to switch from ROBOR to IRCC, the reference index used by banks upon calculating their interest rates, since May 2022. The three-month ROBOR index, used to calculate variable interest rates on RON-denominated loans contracted before May 2019, has got close to 8%, compared to 3% in January, while the new IRCC index (used for loans contracted after May 2019) is 2.65%. About 9,300 of the applications for the conversion of First Home/New Home loans from the ROBOR index to IRCC have already been approved, and 800 are being analyzed, according to the National Credit Guarantee Fund for SMEs.
Banca Transilvania launched Stup, a space aimed at supporting the entrepreneurial community
Banca Transilvania has launched Stup, a physical and virtual space aimed at supporting the entrepreneurial community. Through this project, BT aims to create the necessary infrastructure to connect entrepreneurs with service providers and product suppliers that would help them set up, run or manage a business. Moreover, various events dedicated to entrepreneurs will be organized within Stup. Stup, located on Calea Șerban Vodă in Bucharest, hosts both part of the BT Mic team and the bank’s partners, who will help support entrepreneurs.
Investment 
Cleaning products manufacturer and distributor Misavan plans to invest RON 3.5m in 2022
The manufacturer and distributor of cleaning and home care products Misavan from Iasi plans to invest RON 3.5 million in 2022 for the development of its product portfolio, of its online business and for its fleet expansion. The budget is over six times lower than in 2021 and half the one from 2020, when the company had focused on the development of its own logistics warehouse. This was one of the biggest investment projects carried out by the company, which has been present on the market for more than two decades.
The 4.2 hectare "La Terenuri" sports center was inaugurated on Friday, in Cluj-Napoca
The 4.2 hectare "La Terenuri" sports center was inaugurated on Friday, 29 July, in Cluj-Napoca, in the city’s biggest district, Mănăștur. The investment exceeded EUR 6 million; the money was provided from the local budget. People fond of sports will thus have free access to a number of facilities, inside and outside the center, with the mention that some require a prior reservation on the sportinclujnapoca.ro website.
Square 7 Properties has announced the start of construction works on Giurgiu Shopping Park
Square 7 Properties has announced the start of construction works on a new retail park in Giurgiu, with a gross leasable area of 7,000 square meters. The project in Giurgiu is being developed in partnership with Belgian investment fund Mitiska REIM. The general contractor of the project is the Austrian company Strabag. Square 7 Properties is about to finalize the expansion of the retail park in Slatina and is carrying out authorization procedures for two other new projects in Pitești and Mediaș. The three developments have a total area of approximately 35,000 square meters.
Legislative 
Education Minister announced proposals for reform measures in future legislation
Education Minister Sorin Cîmpeanu announced on Saturday, 30 July that he had participated in a debate with representatives of more than two hundred national colleges during which they had agreed upon some "reform measures" to be included in the future legislation in the sector. These measures include aspects related to admission to prestigious colleges, the possibility for students "capable of excellence" to complete two years of study in one school year, and the possibility for Olympic students to be admitted to high school without having to take the National Assessment or an entrance exam. Another proposal targets the allocation of necessary resources for the training of national, county or Bucharest Olympic teams.
Agriculture Minister expects law on hunting of cormorants to enter into force in September
Agriculture Minister Petre Daea stated, during a press conference held in Bistrița-Năsăud County on Saturday, 30 July that he expected the law allowing the hunting of cormorants, which he says have come to eat "more fish than Romanians", to be implemented starting from September. He indicated that the actual number of cormorants in Romania might exceed 120,000, much above the official figure.
European News 
European Union has concluded a deal to cope with a gas supply crisis
The European Union clinched a deal this week to cope with a gas supply crisis, but to make it work member states need to establish bilateral pacts to share gas and, right now, most have no such agreement in place. Only six such deals have been secured, leaving most of the EU’s 27 countries without firm terms on how and when they would share gas in a supply crunch, or the financial compensation they would give or get for doing so.
Social 
Salaries in the public sector are higher than those in the private sector
An analysis conducted by the Fiscal Council shows that public sector employees’ average gross incomes were nearly 30% higher in 2021, a bigger increase than the one recorded in the case of private sector employees. Romania remains at the top of EU countries that allocate the most money from the budget to public sector salaries. The average gross wage in the public system has been rising in the past few years. The latest data published by the Fiscal Council show that it reached an average of over RON 7,000 in 2021, more than RON 1,500 above the average salary in the private sector.
Ministry of Education will create its own Standardized Assessment Tool Bank
The Ministry of Education has indicated that the standardization of assessments is a key component of the education reform and has announced that it will create its own Standardized Assessment Tool Bank. The institution’s representatives claim that standardized tests can produce data that can guide decisions on all levels, and that this data is essential for the relevance of decisions in the education system, from student or parent decisions to decisions at the class, school and national level.
The share of people with disabilities in Romania’s population was 3.95% at the end of March
The total number of people with disabilities stood at 867,474 at the end of March 2022, the share of people with disabilities in the Romania’s population being 3.95%, according to the statistics published by the Ministry of Labor and Social Solidarity. 98.09% of these people (850,942) were in family care and/or lived independently (non-institutionalized) and 1.91% (16,532 people) were in public residential social care institutions for adults with disabilities (institutionalized) coordinated by the Ministry of Labor through the National Authority for the Protection of the Rights of Persons with Disabilities.