News

Daily Newsletter - 19 September 2022

Summary

Macroeconomic (3)
Financial (3)
Investment (4)
Legislative (4)
European News (1)
Social (3)
Macroeconomic 
US and Europe could enter a recession in 2023
Monetary policy tightening will slow down global growth as central banks are reversing their loose policy in response to continued cost pressures in global supply chains, amplified after Russia’s military actions in Ukraine destabilized energy, food and key commodity markets, according to a report released by S&P rating agency. Inflation, energy security and geopolitical uncertainty are the main risks, the ratings agency indicated. Moreover, persistent inflation and consumers’ caution could also push the US and possibly Europe into recession, most likely in 2023.
Romania is among EU countries with high annual inflation rates in August
Euro area annual inflation rate reached a new record high of 9.1% in August (up from 8.9% the previous month), while in the European Union (EU) it grew from 9.8% to 10.1%. The highest inflation rates were recorded in Estonia, Latvia, Lithuania, Hungary, the Czech Republic, Bulgaria, Poland, the Netherlands, Slovakia and Romania, according to data published by the European Union’s Statistical Office (Eurostat). Compared with July, annual inflation fell in 12 Member States and rose in 15 others. In Romania, annual inflation rate increased to 13.3% in August, from 13% in July. Annual inflation rate in Romania stood at 4% in the same month of 2021.
Wholesale trade turnover recorded a two-digit advance in the first seven months of 2022
Wholesale trade turnover (except for trade in motor vehicles and motorcycles) grew by 27.5% as a gross series and by 27.3% as a working days and seasonally adjusted series in the first seven months of 2022 compared to the similar period of 2021, according to data published by the National Institute of Statistics (INS) on Friday, 16 September. Moreover, wholesale trade turnover (except for trade in motor vehicles and motorcycles) increased by 24.4% as a working days and seasonally adjusted series in July 2022, compared to July 2021.
Financial 
Banca Transilvania plans to raise up to EUR 1 billion from investors
Banca Transilvania (stock exchange symbol TLV), the biggest credit institution in Romania asset-wise, has convened its shareholders for 18 October 2022 to ask them to approve a program of euro- and/or RON- and/or foreign currency-denominated corporate bond issues, as the case may be, in market conditions in terms of interest rate, with a maximum maturity of 10 years and annual or semi-annual coupon frequency, according to the notice to attend published on Bucharest Stock Exchange. The bank from Cluj thus wants to raise a maximum of EUR 1 billion or equivalent, based on a flexible structure, through several separate issues over a maximum period of 10 years and with delegating powers to set the terms of the issuance program to the Board of Directors.
UniCredit Bank steps up financing for companies affected by the conflict in Ukraine
UniCredit Bank is to increase its financing capacity for companies in Romania that have been directly or indirectly affected by the economic consequences of the conflict in Ukraine through interruptions in supply chains and other shocks, as well as for small and medium-sized enterprises. The bank will thus access a senior loan of RON 246 million over a three year crediting period from the European Bank for Reconstruction and Development.
Companies with up to EUR 5 million turnover can open accounts 100% online at OTP Bank
OTP Bank Romania offers a 100% online current account for legal entities through 10 packages with costs starting from zero RON, signed electronically. The product is designed for companies with an annual turnover of up to EUR 5 million, authorized natural persons (PFA) and individual enterprises. The account is opened following an online application, followed by the online registration and the mandatory video identification, after which the customer obtains secure access to the Internet & Mobile Banking service for easy account management.
Investment 
Galati becomes the target for the largest wind power project in Romania
At the end of August, project company Hoopeks International obtained the technical approval for the connection to the grid of a 629 MW wind power project in Galaţi, according to public data from Transelectrica, the operator of the national energy transport system. This is the largest wind farm approved so far and if it is finalized, it will be the biggest such investment in Romania. Fântânele-Cogealac is currently the largest local wind farm, with a capacity of 600 MW, but which is split into two projects managed by different companies. Fântânele-Cogealac wind farm is a EUR 1 billion investment made by the Czech company CEZ in 2010-2012. Given the dropping cost of equipment, the recently approved investment in Galaţi could amount to about EUR 500 million.
Nokian Tyres is considering investing in a new tires plant in Romania
Finnish company Nokian Tyres, one of the biggest tire manufacturers in the world, which produces for the aftermarket exclusively and does not supply tires to automotive plants, is considering investing in a new plant in Romania. Prime Minister Nicolae Ciucă met with a delegation of the company at Victoria Palace on Wednesday, 14 September 2022,. The dialog focused on the state aid packages available for large investments and the openness towards the need to relocate industrial production capacities following the Russian military aggression in Ukraine, but also in Asia. Nokian could thus become the fourth largest tire manufacturer in Romania after Michelin, Pirelli and Continental.
Automobile Bavaria will have a new center for Rolls-Royce customers
Automobile Bavaria, the importer of the German group BMW, which owns the customer center and the first Rolls-Royce authorized service center in the country in Băneasa, will remodel the area to meet the new Rolls-Royce standards. This will involve significant investments, according to Ciprian Bercea, Marketing & Digitalization Director at Automobile Bavaria. Automobile Bavaria Group entered Romania in 1994, in Braşov through Michael Schmidt and currently has the largest network of authorized distributors in Central and Eastern Europe for the BMW car brand.
US giant Booking Holdings to invest EUR 100 million on the Romanian market
Booking Holdings, the US giant that operates several online travel brands and other associated services, the best known of them being the Booking.com booking platform, currently has about 50 vacant jobs in its Center of Excellence in Bucharest, and will thus reach over 200 employees on the local market by the end of the year. Booking Holdings’ Center of Excellence in Romania, where a total of EUR 100 million will be invested over five years, is the first such center of the US giant that now supports cybersecurity and fraud monitoring operations, IT infrastructure and acquisition analysis for brands part of the group, such as Booking.com and Priceline.com.
Legislative 
Government approves methodological norms for implementation of minimum inclusion income
Ministry of Labor and Social Solidarity has announced that on Friday, 16 September, the Government approved the methodological norms for the enforcement of Law 196/2016, through which the reform regarding the minimum inclusion income was recently implemented. According to the Ministry of Labor, under this reform, the three means-tested social benefits, namely social assistance, family support allowance and home heating allowance, have been correlated to form a unitary support package for underpriviledged categories.
Government has increased the number of positions in public pre-university education by 2,200
The Government announced on Friday, 16 September, that it had increased the number of positions in public pre-university education by 2,200. The Government thus decided to amend Government Decree 369/2021 on the Education Ministry’s organization and functioning. As a result, the number of positions in public pre-university education, including special education, county centers for educational resources and assistance/Bucharest Municipality’s Center for Educational Resources and Assistance, necessary for the inclusion of nurseries into the education system and for covering the shortage of teaching staff in schools and kindergartens where the number of formations has increased and for the implementation of the pilot program aimed at providing food support for pre-school children and pupils in 350 public pre-university education establishments, has been increased.
Government approved an OUG amending and completing AFM’s activity and attributions
On Friday, 16 September, the Government approved an Emergency Ordinance amending and completing the Environmental Fund Administration (AFM)’s activity and attributions, a document which stipulates, among other things, that AFM will be in charge of managing the IT systems that allow monitoring waste transactions on Romania’s territory, as well as of some works for closing and greening non-compliant landfills. AFM’s personnel and salary levels will increase, given the heavy workload.
Government approves draft law to complete the powers of the Legislative Council
The Government approved, during the meeting on Friday, 16 September, a draft law amending the Law on the establishment, organization and functioning of the Legislative Council (LC), which proposes supplementing the Council’s powers in the sense of publishing the consolidated version of an amended or completed normative act on the Legislative Council’s website after the entry into force of the amending act. The draft law thus proposes amending Law 73/1993 on the establishment, organization and functioning of the Legislative Council, as well as Law 24/2000 on the legislative technique norms for the drawing up of normative acts.
European News 
Romania to increase energy cooperation with Ukraine and Moldova
Romania, Moldova and Ukraine agreed to sign an inter-governmental agreement on interconnection and increased cooperation in the energy field. The energy and foreign affairs ministers from the three countries met in Odessa and agreed to increase bilateral electricity exchanges between them, and sign bilateral contracts for the short-, medium- and long-term, Romanian Energy Minister Virgil Popescu wrote on his Facebook page. The minister also noted the importance of cooperation because of the multidimensional crises affecting Ukraine and the Republic of Moldova, as well as in the perspective of establishing a long-term dialogue and coordination mechanism.
Social 
Government approves norms for the implementation of "Warm Meal in Schools" program
Government spokesman, Dan Cărbunaru has announced that on Friday, the Government approved the methodological norms for the implementation of the "Warm Meal in Schools" program, defining the situations in which educational establishments benefit from this project and the minimum mandatory rules for preparing meals for pre-school children and pupils, based on the National Institute of Public Health’s recommendations. At the beginning of the government meeting on Friday, Prime Minister Nicolae Ciucă said he was convinced the Ministry of Education would take measures to make sure the schools to benefit from this program were the ones that really needed it.
Employment rate of working age population was 63.5%
Employment rate of working-age population (15-64 years) was 63.5% in Q2 of 2022, up by 1.1% against Q1/2022, according to data from the National Institute of Statistics (INS). Employment rate was higher among men (72.0%, compared to 54.8% among women) and among people living in urban areas (69.3%, compared to 56.6% in rural areas), while young people’s employment rate (15-24 years) was 19.3%. Unemployment rate in Q2/2022 stood at 5.3%, down by 0.7% quarter-on-quarter.
Bulgaria, Spain and Romania have the lowest job vacancy rates in EU
Job vacancy rate in the European Union stood at 3% in Q2/2022, up from 2.9% in the previous three months, and from 2.2% in the same period of 2021, according to data published by Eurostat on Friday. In April-June 2022, the Member States with the lowest job vacancy rates were Bulgaria, Spain and Romania (all 0.9%) and Slovakia (1%), while the Member States with the highest job vacancy rates were the Netherlands (5.1%), Belgium (5%), the Czech Republic (4.9%) and Austria (4.8%).